Ajibola Tobi-Osho: Borrowing Is Justified Only If Funds Are Used Productively

Ajibola Tobi-Osho says borrowing is justified only when funds are used productively to drive sustainable economic growth.

ED, Tugrande Alliance Limited, Ajibola Tobi-Osho, has said Nigeria’s rising borrowing should not be a cause for concern, provided the funds are effectively invested in infrastructure, human capital development, and other productive sectors capable of driving sustainable economic growth.

Speaking during an interview with ARISE NEWS on Tuesday , Tobi-Osho said the Federal Government’s latest borrowing plans are primarily aimed at financing fiscal needs after revenue raised in the first half of the year fell short of expectations.

On why the government is borrowing more, she stated:

“I think the 2026 budget has not been met. I think they’ve slowly raised money in the first two quarters and it did not meet up to the expectations. So now they have to make up for the shortfall.”

Addressing concerns that increased domestic borrowing could crowd out the private sector, he acknowledged the risk but noted that maintaining a balance between domestic and external borrowing remains important.

“There will always be domestic borrowing. As for crowding out the private sector, yes, businesses may have to pay higher borrowing costs because government debt is generally considered risk-free.”

Speaking on Nigeria’s debt profile, Tobi-Osho argued that borrowing itself is not the problem, stressing that the real issue is how the borrowed funds are utilized.

“Every country has to raise money. The question is what you are spending money on. If you don’t spend the money right, then the whole essence of raising money becomes useless.”

On ensuring borrowed funds deliver economic value, she added:

“The question is not why you’re borrowing, the question is, are you using the borrowing right? If you don’t build infrastructure and you’re borrowing money, that is more like you’re just wasting the money.”

Commenting on Nigeria’s $5 billion financing arrangement with First Abu Dhabi Bank through a Total Return Swap (TRS), Tobi-Osho described the transaction as a diversification strategy rather than an outright substitute for Eurobond issuance.

“It doesn’t really make sense that any country comes into the Eurobond market every year. It’s a form of diversification. We look at the cost-benefit and think, why not try and raise money from other sources?”

She, however, cautioned that additional collateral requirements could become a challenge if market conditions deteriorate.

“The only problem I see is where you then have to post additional collateral because the bond value dropped or the naira devalued.”

Addressing concerns over Nigeria’s continued borrowing, Tobi-Osho reiterated that spending priorities matter more than the size of the debt.

“Government is in the business of spending. But what are you spending the money on is the most important.”

Speaking on long-term economic growth, she emphasised the importance of investing in education and infrastructure to retain skilled workers and strengthen the economy.

“Human capital is key. We are losing human capital every year. People are relocating. The only way you can stop that is to build your internal infrastructure.”

On the outlook for Nigeria’s Eurobond market, Tobi-Osho said prevailing yields remain attractive enough for the country to raise funds at competitive rates if market timing is carefully managed.

“The yield levels are very, very okay for us to come in to raise. Timing is very key. You have to come to the market when the market is ready to accept you.”

Concluding, Tobi-Osho advised investors to maintain diversified portfolios by including fixed-income assets.

“You must always add fixed income because it’s a way of diversification. Fixed income has to be a portion of your portfolio at any point in time.”