Nigeria Must Reduce Dependence on Borrowing, Build Strong Domestic Revenue Base — Minister of Finance
Nigeria must reduce its reliance on borrowing and strengthen its domestic revenue base to stabilise public finances and sustainably fund development, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has said.
Edun made the remarks on Tuesday at the management retreat of the Nigerian Revenue Service (NRS) in Abuja, warning that the global financial environment has become increasingly hostile to developing economies, making debt-driven financing more costly and less viable.
“And of course, we need to reduce our dependence on debt. Revenue mobilisation within this context is a developmental imperative,” he said.
He highlighted that developing countries now face an unfavourable balance between external inflows and debt obligations, citing 2024 data showing $163 billion in debt service payments compared with $42 billion in overseas development assistance and $97 billion in foreign direct investment.
Edun emphasised that Nigeria’s fiscal sustainability must be anchored on domestic revenue-generating capacity, rather than continued borrowing in an era of high global interest rates and tighter financial conditions.
“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. And before you can generate savings, you have to have the revenue,” he said.
He linked rising debt pressures to global shocks, including the COVID-19 pandemic, geopolitical conflicts, and trade tensions, which forced many developing countries to borrow more while paying higher debt service, squeezing fiscal space.
“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 healthcare, and help the poorest and most vulnerable,” Edun said.
Edun stressed that tax reforms are central to reducing reliance on borrowing, designed to improve fairness, equity, and efficiency in the system while increasing resources for social and capital spending. However, he warned that reforms alone are insufficient without strong execution and improved compliance.
“No fiscal reform can deliver results if compliance is weak or uneven. Yet compliance cannot be achieved through enforcement alone. It is a carrot and stick,” he said.
He also noted the importance of trust in the tax system, stating that citizens must see fairness in administration and tangible benefits from their contributions to infrastructure and services.
Edun described the Nigerian Revenue Service as central to implementing these reforms, with success measured by higher, more predictable revenues, reduced fiscal vulnerability, and stronger public service delivery.
“The connection between macroeconomic conditions and revenue performance is direct and unavoidable. Economic growth expands the tax base. Exchange rate dynamics affect customs revenue. Inflation influences compliance behaviour and affects the real value of collections,” he said.
Earlier, NRS Executive Chairman Zacch Adedeji highlighted that the establishment of the service marked a decisive break from the past, requiring a new approach to leadership, accountability, and execution.
“What brought us here will not be sufficient for where we are going,” Adedeji said, urging senior managers to reassess assumptions and decision-making processes that could either unlock or constrain performance.
He added that the credibility of Nigeria’s revenue architecture and confidence in the broader economy now rests on the NRS’s ability to deliver results with integrity, discipline, and clarity of purpose, with measurable outcomes strengthening public trust and supporting national development.
