Abuja, June 12, 2025 — President Bola Ahmed Tinubu has championed a controversial economic approach that leans heavily on borrowing—particularly oil-backed loans—to build Nigeria’s foreign reserves. While government officials and loyal media voices present this as a strategy for national stability, the underlying reality reveals a fragile system built on mounting debt and high financial risk.
The most recent example is a proposed $5 billion loan deal with Saudi Aramco, touted as a milestone agreement aimed at injecting foreign exchange into the Central Bank and shoring up the naira. But far from being a novel solution, the plan is a continuation of a familiar pattern: borrowing with the promise of strengthening reserves, while leaving Nigeria more indebted and exposed to volatile global oil prices.
The deal involves pledging 100,000 barrels of crude oil per day as collateral—on top of the 300,000 already tied up in other existing loans. With Nigeria currently producing around 1.4 million barrels per day (well below its OPEC quota of 1.8 million), concerns are mounting about whether the country can even meet its repayment obligations.
Critics argue that these oil-backed loans do little to support long-term economic growth. Instead, they serve as temporary buffers to foreign reserves, often invested in low-yield U.S. Treasury bonds earning just 1–3%, while the loans themselves attract much higher interest rates between 5–7%. The math simply doesn’t add up: Nigeria is borrowing high to save low.
This strategy of borrowing to build reserves began in earnest under Tinubu’s administration. Between 2023 and 2024, Nigeria secured over $4.1 billion in loans from the World Bank, including a $2.2 billion “stabilization” loan. In late 2024, another $2.209 billion in external loans was approved, and by December, the Senate gave a green light to a further $7.4 billion and €100 million in borrowing. An even larger $24 billion loan proposal is already in the pipeline for 2025–2026.
Each of these loans is justified with the same reasoning: foreign reserves must be maintained to defend the naira, restore market confidence, and support federal budgets. Yet the country’s debt profile continues to rise sharply. The debt-to-GDP ratio has surpassed 50%, and debt servicing now consumes over 130% of government revenue—leaving fewer resources for healthcare, education, infrastructure, and public services.
Despite the mounting risks, public communication around these loans has been managed by a wave of government-aligned social media influencers and accounts. Their message is clear and consistent: President Tinubu is stabilizing the economy, and foreign reserves are proof of progress. But these narratives often ignore the long-term consequences of debt accumulation and the structural problems—such as oil theft, underinvestment, and pipeline sabotage—that threaten repayment.
Former Vice President Atiku Abubakar and other economists have expressed concerns, warning that Nigeria is essentially leveraging its future earnings for short-term gains, with little assurance of economic transformation. “Borrowing to save,” as practiced today, may provide temporary relief, but it does not equate to sustainable policy.
In truth, Nigeria’s foreign reserve levels have become more a measure of borrowing activity than of genuine economic strength. Without significant reforms to the oil sector, export diversification, and improved domestic productivity, borrowing to boost reserves risks becoming a dangerous cycle with diminishing returns.
Nigerians are watching closely. As inflation bites and the naira weakens, many are beginning to ask: are we saving for the future, or borrowing it away?