By Newspot Nigeria Editorial Desk
The International Monetary Fund has advised Nigeria to revise its ₦54.99 trillion 2025 budget downward in response to declining oil prices. It has also called for sustained tight monetary policy and high interest rates until inflation slows further. These suggestions might align with conventional models, but they risk pushing more Nigerians into deeper hardship.
Inflation has slowed from an average of 31% in 2024 to 22.97% as of May 2025. But the cost of food and daily essentials remains punishing. Official unemployment is over 33%, and more than 130 million Nigerians are living in multidimensional poverty. These are not abstract figures—they reflect families skipping meals, children out of school, and small businesses shutting their doors.
Most banks are unwilling to lend to the people who need credit the most. When loans are offered, they often come with interest rates between 27% and 30%, and demand collateral that far exceeds the value of the loan itself. The result is predictable: the people who could build the economy are locked out of it.
What’s missing is not money, but access to it. Credit is what allows farmers to plant, factories to operate, and traders to expand. When credit doesn’t move, nothing else can. Ben Bernanke, the former head of the U.S. Federal Reserve, once reflected that the real danger in a financial crisis isn’t always too much spending—it’s when productive people can’t borrow. That is the trap Nigeria is falling into.
Policymakers have an alternative. A small reallocation—just 3% of the national budget, about ₦1.65 trillion—could establish a national loan guarantee fund. This would give commercial banks the confidence to lend to real producers by covering the first ₦10 million in loan risk. With an average loan size of ₦1 million, such a guarantee could unlock access to credit for 1.65 million small business owners, farmers, and cooperatives. Even if only two-thirds of those loans translate into viable enterprises, that’s over a million jobs.
The revenue return from such a move is not speculative. More workers mean more taxes. More productivity means more goods and services in the market. More self-reliance means less pressure on social interventions. The initial ₦1.65 trillion doesn’t disappear—it circulates, multiplies, and pays itself back over time.
Compare that to the risk of doing nothing. The IMF warns that failure to cut the budget could raise the deficit from 4.1% to 4.7% of GDP—roughly a ₦660 billion difference. But that figure is modest compared to what is already lost to inefficiencies and avoidable tax leakages each year. It is also less than what one thriving sector—like construction or telecoms—can add back to the economy if properly supported.
This is about smart investment, one that puts people first, not metrics. If tightening continues and growth weakens further, the same institutions recommending restraint will be the first to publish reports describing Nigeria as unstable, risky, or fragile. But the consequences of their advice will remain with the people.
Policymakers must step away from rigid instructions written abroad and shape a strategy that meets Nigerians where they are. The economy cannot breathe without credit. The people cannot participate without access. The future cannot be built on fiscal neatness alone.
Nigeria doesn’t need applause. It needs a functioning economy. That begins by unlocking the tools already within reach—and using them to open the gates, not close them.
—Newspot Nigeria
