Expert Calls For Asset Sales, Balance Sheet Reset To Tackle Nigeria’s Rising Debt’

 

…Firm Warns Budget Adjustments Not Enough To Address Debt Burden

…Nigeria Risks Prolonged Period Of Fiscal Fragility, Missed Opportunities

 

As Nigeria grapples with mount­ing debt obligations and shrink­ing fiscal space, CFG Advisory has called for a decisive shift in fiscal strategy, urging the Federal Government to embark on large-scale asset sales and comprehensive balance sheet restructuring to restore sustain­ability and unlock growth.

In its 2026 economic out­look, the advisory firm argues that conventional budget ad­justments will no longer be sufficient to address Nigeria’s deepening debt burden, warn­ing that debt service costs have reached levels that threaten economic stability and devel­opment spending.

While presenting the 2026 Economic Outlook to members of the Finance Correspondents Asso­ciation of Nigeria (FI­CAN) in Lagos, on Tues­day, Adetilewa Adebajo, Chief Executive Officer at CFG Advisory, said Ni­geria must pursue a full fiscal reset anchored on optimising government assets, restructuring lia­bilities and repositioning the oil and gas sector as a driver of revenues and foreign exchange.

At the centre of the recommendations is a proposal for the Federal Government to sell down significant portions of its equity holdings in li­censed concession assets.

According to CFG Ad­visory, selling up to 49 percent of government stakes in these assets could raise as much as $50 billion, providing much-needed resources to reduce debt, boost reve­nues and recapitalise key state-owned enterprises, particularly the Nigerian National Petroleum Com­pany Limited (NNPC).

Debt Pressures Force Rethink

Nigeria’s public debt has risen sharply in re­cent years, crossing the $100 billion mark amid persistent budget deficits and weak revenue mobili­sation. In the 2026 budget, debt service obligations of about N15.52 trillion are projected to exceed combined allocations to defence, security, educa­tion and health, under­scoring the growing dom­inance of debt repayment in public finances.

CFG Advisory warns that this trajectory is un­sustainable. With nearly 60 percent of government revenues now devoted to servicing debt, fiscal space for capital invest­ment and social spending has narrowed signifi­cantly. Savings from the removal of fuel subsi­dies, estimated at about $15 billion, are also being absorbed largely by debt service, limiting their impact on infrastructure and economic growth.

“The Federal Govern­ment no longer has the balance sheet capacity to fund its capital budget independently,” Adebajo noted, arguing that with­out bold action, Nigeria risks remaining trapped in a cycle of high debt, weak growth and rising social pressures”.

 

Asset Sales As Fiscal Lever

Against this backdrop, CFG Advisory positions asset sales as a critical fiscal lever. The proposed divestment of up to 49 percent in licensed con­cession assets is aimed not only at raising cash but also at improving ef­ficiency and governance through increased private sector participation.

According to Adeba­jo, proceeds from such sales—estimated at up to $50 billion—could be used to materially reduce Nigeria’s debt stock, ease pressure on annual debt service and improve rev­enue flows.

Part of the funds, he said, “should be chan­nelled toward recapital­ising NNPC to strength­en its balance sheet and operational capacity”.

CFG argues that op­timising equity within the government’s capital structure is preferable to continued borrowing, which has proven in­creasingly costly amid high interest rates and volatile global financial conditions.

NNPC Balance Sheet Re­structuring

Beyond asset sales, CFG Advisory places strong emphasis on restructur­ing NNPC’s balance sheet to improve transparency, accountability and in­vestor confidence. A key recommendation is the consolidation of the com­pany’s oil forward con­tracts into a structured debt instrument.

According to CFG, this approach would simplify NNPC’s liability profile, enable better financing terms and improve over­sight of obligations that have historically been opaque. It would also align NNPC’s finances more closely with global best practices, making the company more at­tractive to investors and partners.

 

Strengthening NNPC’s balance sheet is critical not just for the company, but for Nigeria’s broader fiscal health,” CFG Advi­sory said, noting that the national oil company re­mains central to govern­ment revenues and for­eign exchange earnings.

Reviving Oil And Gas Invest­ment

CFG Advisory links balance sheet restructur­ing directly to the urgent need to revive investment in Nigeria’s oil and gas sector. Investment in the sector has fallen sharp­ly over the past decade, declining from peaks of over $22 billion in 2009 and 2014 to less than $3 billion in 2024.

This collapse in invest­ment has constrained pro­duction, reduced export revenues and weakened Nigeria’s external po­sition. CFG argues that restoring investor confi­dence through fiscal re­form, regulatory clarity and improved security is essential to reversing this trend.

The advisory firm be­lieves that with the right reforms in place, Nigeria could attract fresh capital into oil and gas, enabling production to ramp up to­ward 2.5 million barrels per day. Higher output, it notes, would improve revenue sustainability, strengthen foreign ex­change inflows and sup­port exchange rate sta­bility.

Wider Economic Implications

CFG Advisory’s recom­mendations come at a time when Nigeria’s economy is showing tentative signs of stabilisation. Inflation has moderated from earli­er highs, foreign reserves have improved and the foreign exchange market has become more trans­parent and market-driven.

Foreign portfolio in­vestment inflows report­edly reached about $21 billion as of October 2025, while business sentiment indicators have improved

 

Despite these gains, CFG cautions that stabi­lisation without growth will not be enough. The advisory firm projects GDP growth of about 5 percent in 2026, but stress­es that this remains well below the 8–10 percent required to support Nige­ria’s population of over 200 million and lift mil­lions out of poverty.

According to CFG, un­locking higher growth will require deliberate policies that convert re­form gains into productiv­ity-led expansion. Asset sales, balance sheet re­structuring and renewed investment in oil and gas are seen as critical com­ponents of this strategy.

Security And Regulatory Clarity

CFG Advisory also highlights the role of security and regulatory certainty in reviving in­vestor interest. Persistent insecurity has disrupted oil production, agricul­ture and logistics, while regulatory uncertainty has discouraged long-term investment.

The advisory firm ar­gues that improved secu­rity, clearer regulatory frameworks and consis­tent policy implementa­tion would amplify the impact of fiscal reforms, making Nigeria a more attractive destination for both domestic and foreign capital.

Political Will Key

With elections ap­proaching in 2027, CFG warns that political con­siderations could delay or dilute difficult but neces­sary reforms. However, it insists that postponing ac­tion would come at a high cost, as debt service con­tinues to rise and growth remains subdued.

“The urgency of now is unmistakable,” the report notes, adding that asset sales and balance sheet restructuring offer a practical path to restor­ing fiscal sustainability without imposing fur­ther hardship on house­holds.

A Narrow Window For Reset

CFG Advisory con­cludes that Nigeria has a narrowing window to reset its fiscal trajectory.

By monetising un­derutilised assets, re­structuring liabilities and reviving investment in oil and gas, the coun­try could ease its debt bur­den, strengthen revenues and lay the foundation for sustainable growth

Failure to act decisive­ly, it warns, would leave Nigeria increasingly constrained by debt, with limited capacity to invest in infrastructure, social services and economic transformation.

 

As fiscal pressures in­tensify, the advisory firm says the choice before policymakers is clear: embrace a comprehensive balance sheet reset now, or risk a prolonged peri­od of fiscal fragility and missed opportunities

Culled From Independent (except headline)