Finance minister says stronger domestic revenue is key to fiscal stability as Senate signals continued borrowing may remain unavoidable….
Nigeria must scale back 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 in Abuja, warning that the global financial environment has become increasingly unfavourable to developing economies, making debt-driven financing more expensive and less sustainable.
“And of course, we need to reduce our dependence on debt. And so, revenue mobilisation within this context is a developmental imperative,” Edun said.
He noted that the global system was gradually shifting away from multilateral cooperation, with countries focusing more on domestic priorities and reducing cross-border financial support. According to him, this trend has left developing economies facing a widening gap between external inflows and rising debt service obligations.
Citing 2024 data, Edun said developing countries paid about 163 billion dollars in debt service, compared with 42 billion dollars in overseas development assistance and 97 billion dollars in foreign direct investment, highlighting a negative net flow of external finance.
“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 can then be channelled into investment. And before you can generate savings, you must first generate revenue,” Edun added.
The minister linked Nigeria’s rising debt pressures to global shocks such as the COVID-19 pandemic, geopolitical conflicts, and trade tensions, which have compelled many developing countries to borrow more while facing higher debt servicing costs. He said these pressures have narrowed fiscal space and made it harder for governments to fund essential services, reinforcing the urgency of building sustainable domestic revenue.
“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 support the poorest and most vulnerable,” he said.
Edun’s call comes amid indications from the Senate that fresh borrowing may still be necessary to address Nigeria’s widening budget deficit. Speaking at a public hearing on the 2026 Appropriation Bill, Chairman of the Senate Committee on Appropriations, Olamilekan Adeola, said continued borrowing had become difficult to avoid given weak and unpredictable revenue flows alongside significant infrastructure and development needs.
“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 Nigeria’s ongoing tax reforms as central to reducing dependence on debt, noting that the reforms are designed to improve fairness, equity, and efficiency while expanding resources available for both social and capital expenditure.
However, he stressed that policy changes alone would not deliver results without effective implementation and stronger 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.
According to the minister, building trust in the tax system is critical to improving compliance and reducing borrowing, as citizens must understand their obligations, perceive fairness in administration, and see tangible benefits from their contributions.
“People must see the benefits of their contributions in infrastructure and in services,” he said, describing revenue reform as both a technical and governance challenge.
Edun said the Nigerian Revenue Service occupies a central role in the fiscal reform agenda and will be critical in translating policy into measurable outcomes. He noted that the success of reforms should be reflected in higher and more predictable revenues, reduced fiscal vulnerability, and improved public service delivery.
“The connection between macroeconomic conditions and revenue performance is direct and unavoidable. Economic growth expands the tax base. Exchange rate movements affect customs revenue. Inflation influences compliance behaviour and the real value of collections,” he said.
He warned that Nigeria must develop a revenue system resilient to volatility, rather than one that rises sharply when oil prices are high and weakens when prices fall.
Speaking earlier, Executive Chairman of the Nigerian Revenue Service, Zacch Adedeji, said the creation of the agency marked a decisive turning point and placed a significant responsibility on the institution to deliver on Nigeria’s fiscal reform goals.
Adedeji said the transition signals a new phase requiring stronger leadership, accountability, and execution, warning that legacy practices could undermine reform if not addressed.
“What brought us here will not be sufficient for where we are going,” he said, urging senior officials to reassess their leadership approaches, assumptions, and decision-making processes to improve performance.
He added that the credibility of Nigeria’s revenue framework and broader economic confidence now depend on the service’s ability to deliver results with integrity, discipline, and clarity of purpose. According to him, the institution will ultimately be judged not by policy statements but by measurable outcomes that strengthen public trust and support national development.
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