By December 2023, Nigeria’s total public debt had swollen to an eye-watering N97.1 trillion, an 11.4 percent leap from just six months earlier. In that brief window, the Federal Government, states, and the FCT piled on nearly N10 trillion in new obligations. In plain terms, our debt curve is shooting upward while our economic growth limps along.
External debt stood at N38.22 trillion, with the Federal Government responsible for N34.07 trillion and the 36 states plus the FCT owing N4.15 trillion. The remainder, N58.88 trillion, came from domestic borrowing. Debt servicing in 2023 alone gulped $3.5 billion, a sum that could have built dozens of highways, rehabilitated hundreds of hospitals, or revitalised failing schools.
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Amid this national borrowing indulgence, Kaduna State has stepped into the headlines. In August 2025, Governor Uba Sani confirmed that the state, with Federal Government backing, had secured a $25.35 million concessional loan from the Kuwait Fund for Arab Economic Development. The funds will target one of Nigeria’s most stubborn crises: the education of out-of-school children.
The programme is ambitious, with the construction of 102 new climate-resilient schools, rehabilitation of 170 more, training for teachers, and special access for girls, internally displaced children, and those with disabilities. The loan is part of a $62.8 million financing package supported by the Islamic Development Bank, Global Partnership for Education, Education Above All Foundation, Save the Children, and Kaduna’s own N1 billion counterpart funding. Education spending has been pushed to 26 per cent of the state’s 2025 budget.
“As interest rates rise and the naira weakens, foreign debt becomes more expensive in real terms. That is why every dollar borrowed must produce more than a dollar in measurable value; otherwise, we are simply digging deeper for the next generation to fill.”
On paper, this is the kind of loan you want to see, one that directly addresses human capital development and has co-funding from credible international partners.
Kaduna’s debt profile is already heavy. In Q1’ 2025 alone, the state took on N41.3 billion in new international loans, adding to an inherited $587 million in external and N85 billion in domestic debt from the previous administration. Debt servicing in that quarter alone ate up N18.5 billion, roughly 27 percent of total revenue.
That means over a quarter of the state’s income is vanishing into repayments, not roads, not clinics, not jobs. For a state grappling with insecurity, unemployment, and crumbling rural infrastructure, that is a dangerous trade-off.
Worse still, Kaduna is still dealing with the shadow of a $350 million World Bank loan approved under former Governor Nasir el-Rufai for road projects. Years later, large swathes of the state’s poorest local government areas have little to show for it; roads are incomplete, and communities remain isolated. If history is a guide, loans are not a guarantee of delivery.
There is nothing inherently wrong with taking loans. In fact, infrastructure and education projects often require upfront capital that can only be raised through borrowing. But borrowing without strict oversight, transparent accounting, and measurable outcomes is fiscal negligence.
Nigeria’s wider borrowing habit is troubling precisely because too much of it has been driven by recurrent expenditure, not growth-driving investment. Servicing debt for past consumption is a treadmill to nowhere. Kaduna’s education loan could buck the trend, but only if it avoids the pitfalls of poor implementation, political interference, and opaque reporting.
Nigeria’s 2024 Appropriation Act already has a N7.83 trillion deficit, to be financed by N6.06 trillion in domestic and N1.77 trillion in external borrowing. Every state that taps foreign credit under federal guarantees adds to that mountain. The danger is that debt servicing costs start to crowd out critical spending across the board.
As interest rates rise and the naira weakens, foreign debt becomes more expensive in real terms. That is why every dollar borrowed must produce more than a dollar in measurable value; otherwise, we are simply digging deeper for the next generation to fill.
Kaduna’s loan should be a test case for doing things differently, especially when the state applies the right measuring/monitoring mechanism, such as radical transparency, which should involve publishing quarterly progress reports on school construction, rehabilitation, and teacher training, with verifiable site inspections and public audits.
Ring-fencing funds that will ensure every naira of the loan goes to its intended purpose. No diversions, no administrative overhead bloat. Also, community oversight, which will allow local school boards, parents, and civil society groups to have a seat at the table from planning to delivery.
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Above all, debt sustainability reviews will ensure that before any new borrowing by any state and Nigeria at large, it should be demonstrated how repayments will be met without crippling essential services. If Kaduna can meet these standards, it will set a precedent for states to borrow strategically, not recklessly.
Debt is a tool, and when used wisely, it can build a future; used carelessly, it mortgages it. Kaduna’s education loan could become a model for targeted, transformative borrowing or yet another entry in Nigeria’s long ledger of wasted opportunities.
The choice, as always, is in the execution.
