WORLD BANK EX-CHIEF CRITICISES NIGERIA’S COLLATERAL-BASED BORROWING APPROACH

A former president of the World Bank has criticised Nigeria’s reliance on collateral-backed borrowing, warning that the strategy could limit the country’s financial flexibility and create long-term economic challenges.

The former World Bank official said borrowing arrangements that rely heavily on securing loans with national assets may reduce the government’s ability to manage future economic needs. He urged policymakers to focus on building stronger revenue systems, improving economic productivity, and attracting more private sector investment.

Economic analysts said Nigeria’s increasing use of secured financing has been driven by limited fiscal space, rising development needs, and challenges in generating sufficient domestic revenue. However, they noted that excessive dependence on such borrowing methods could increase financial risks if not carefully managed.

Experts advised the government to prioritise investments that generate economic returns, strengthen public finances, and improve transparency in debt management.

The Federal Government has maintained that borrowing remains necessary to fund critical infrastructure and development projects, while emphasising that financing decisions are guided by economic priorities and sustainability considerations.