An economist and former Executive Director of Energy Bank Ghana, Isaac Monehin, has urged President Bola Ahmed Tinubu to adopt a productivity-driven approach to foreign borrowing, warning that Nigeria must avoid accumulating debts that impose heavy repayment obligations on future generations without delivering corresponding economic benefits.
Monehin, who served as Senior Special Assistant on Public-Private Partnership (PPP) to former Ondo State Governor, Dr Olusegun Mimiko, made the recommendation in a letter addressed to the President, outlining six policy measures for ensuring that foreign loans contribute meaningfully to national development.
He maintained that Nigeria should not abandon foreign borrowing, given its development needs, but insisted that every loan must be justified by its economic benefits, repayment capacity and contribution to the country’s productive strength.
According to him, foreign loans should be contracted only when government can demonstrate their economic justification and establish a credible capacity to repay them.
He advised the Federal Government to prioritise borrowing for productive investments, particularly electricity and energy security, agricultural transformation, transportation infrastructure, industrial development and human capital, rather than using borrowed funds to finance routine recurrent expenditure, administrative overheads and poorly prioritised projects.
The economist also advocated what he described as a rigorous marginal borrowing test, urging the government to establish the expected economic and fiscal returns of every proposed loan before approval.
He said such assessments must take into consideration the full cost of borrowing, including interest rates, associated fees and foreign exchange risks, while every loan should have clearly defined deliverables, implementation timelines and measurable performance indicators.
Monehin further recommended the aggressive mobilisation of alternative sources of infrastructure financing, including Public-Private Partnerships, pension funds, infrastructure bonds and private institutional capital, particularly for commercially viable projects.
On domestic revenue generation, he identified Nigeria’s weak revenue-generating capacity as one of its greatest fiscal challenges, urging the government to block revenue leakages, improve tax compliance, expand productive economic activities and eliminate wasteful public expenditure.
He cautioned that borrowing could not indefinitely serve as a substitute for comprehensive fiscal reforms, stressing the need to reduce the cost of governance and strengthen the country’s internal revenue base.
The former Energy Bank Ghana executive also called for greater transparency and accountability in the management of foreign loans, insisting that the terms, purposes, repayment obligations and expected economic returns of significant borrowing arrangements should be made public.
He argued that Nigerians deserved to know the specific projects for which their country was incurring debts and the economic benefits expected from such financial commitments.
Clarifying his position, Monehin said he was not advocating an end to foreign borrowing, describing such a position as unrealistic in view of Nigeria’s development requirements.
Rather, he called for a transition from debt-driven expenditure to productivity-driven borrowing, where loans are tied to investments capable of expanding economic output, generating revenue and improving citizens’ living conditions.
He also drew attention to the intergenerational implications of public debt, noting that every dollar borrowed by the present administration ultimately becomes an obligation for future taxpayers.
According to him, Nigeria must ensure that future generations inherit productive infrastructure, stronger institutions and a prosperous economy rather than an overwhelming debt burden accumulated to finance consumption and inefficiencies.
Drawing lessons from the United States, Monehin observed that a strong, diversified and productive economy could sustain substantial debt, but warned that even economic strength had its limits.
He urged Nigeria to emulate America’s productive capacity, revenue strength and institutional credibility rather than simply its ability to access large volumes of credit.
The economist consequently challenged the Federal Government to demonstrate four critical elements before contracting additional foreign loans: the economic value the borrowing would create, the additional revenue it would generate, the cost of repayment and whether future generations would be better off as a result of the borrowing.
He maintained that the success of the Tinubu administration’s economic reforms should not be measured by the volume of financing attracted by government but by the extent to which such resources translate into productive capacity, employment opportunities, improved household prosperity and poverty reduction.
He concluded with a strong appeal for responsible debt management, declaring: “Nigeria needs to borrow to develop, not borrow to survive.”
Monehin is an economist and former Executive Director of Energy Bank Ghana. He also served as Senior Special Assistant on PPP to former Ondo State Governor, Dr Olusegun Mimiko.
