Nigeria must reduce its reliance on borrowing and strengthen domestic revenue generation to stabilize public finances and sustainably fund development, Finance Minister and Coordinating Minister of the Economy Wale Edun said Tuesday.
Edun spoke at the management retreat of the Nigerian Revenue Service in Abuja, warning that the global financial environment has become increasingly difficult for developing economies, making debt financing more expensive and less viable.
“And of course, we need to reduce our dependence on debt. And so, revenue mobilization within this context is a developmental imperative,” Edun said.
He said multilateral cooperation is weakening as countries prioritize domestic interests and scale back cross-border financial support, leaving poorer nations facing an unfavorable balance between external inflows and debt service obligations.
Citing 2024 data, Edun said developing countries paid about $163 billion in debt service, compared with $42 billion in overseas development assistance and $97 billion in foreign direct investment, underscoring what he described as negative net external flows.
“This reality means Nigeria has to anchor its fiscal sustainability on its own revenue-generating capacity, rather than continuing to rely on borrowing in an era of high global interest rates and tighter financial conditions,” he said.
“The primary anchor of our fiscal sustainability is going to be our own fiscal efforts, our own ability to generate savings, which then can be used for investment,” he added. “And before you can generate savings, you have to have the revenue.”
Edun linked Nigeria’s rising debt pressures to global shocks, including the COVID-19 pandemic, geopolitical conflicts and trade tensions, which he said have forced many developing countries to borrow more at higher costs. The resulting strain has limited governments’ ability to fund essential services.
“That is why it is critical at this time that we move to an era of sustainable revenues so that we can invest meaningfully in infrastructure, strengthen education and health care, and help the poorest and most vulnerable,” he said.
His comments come amid remarks by the Senate indicating that additional borrowing may be necessary to finance Nigeria’s 2026 budget deficit.
At a public hearing on the 2026 Appropriation Bill, Senate Committee on Appropriations Chairman Olamilekan Adeola said continued borrowing is unavoidable given weak revenue inflows and large infrastructure and development gaps.
“Nigeria cannot help but keep borrowing because revenue inflows are unpredictable and development needs are enormous. What matters is how we borrow and how we fund our deficits,” Adeola said.
Edun described ongoing tax reforms as central to reducing dependence on debt, saying they are intended to improve fairness, equity and efficiency while increasing resources for social and capital spending.
However, he said reforms would not succeed without stronger compliance.
“No fiscal reform can deliver results if compliance is weak or uneven,” he said. “Yet compliance cannot be achieved through enforcement alone. It is a carrot and stick.”
He said building trust in the tax system is essential, adding that citizens must see fairness in administration and tangible benefits from their contributions.
“People must see the benefits of their contributions in infrastructure and in services,” he said.
Edun said the Nigerian Revenue Service sits at the center of the fiscal reform agenda and will play a key role in translating policy into measurable outcomes, including higher and more predictable revenues and improved public service delivery.
“The connection between macroeconomic conditions and revenue performance is direct and unavoidable,” he said, noting that economic growth expands the tax base, exchange rate movements affect customs revenue and inflation influences compliance and the real value of collections.
He said Nigeria must build a revenue system that is resilient to volatility and less dependent on oil price cycles.
Earlier, Nigerian Revenue Service Executive Chairman Zacch Adedeji said the creation of the NRS marks a break from the past and places a heavy responsibility on the institution to deliver on fiscal reform goals.
“What brought us here will not be sufficient for where we are going,” Adedeji said, urging senior officials to reassess leadership styles and decision-making processes.
He said the credibility of Nigeria’s revenue system and broader economic confidence depend on the NRS’s ability to deliver results with integrity and discipline.
“The service will not be judged by speeches or reform documents, but by measurable outcomes that strengthen public trust and support national development,” Adedeji said.
