The “No Borrowing” Mantra: Economic Prudence or Policy Misconception?
Introduction
I write in the public interest, for posterity, and to set the record straight amid growing political rhetoric and economic misconceptions. Too often, the masses are swayed by appealing but simplistic narratives from political leaders. One such narrative is the popular claim by some Governors that “we have not borrowed.” While this may sound fiscally responsible on the surface, it raises an important question: is this truly sound economic policy, or a misunderstanding of development finance?
Recently, during a media chat with the Governor of Anambra State, Dr. Reuben Abati of Arise TV inquired about the level of borrowing undertaken to execute major infrastructural projects, including the construction of a new Government House. The Governor proudly stated that his administration had not borrowed a kobo. This assertion provides a useful backdrop to examine the economic implications of borrowing in public finance.
What Is the Primary Objective of Government?
Chapter II, Section 14(2)(b) of the 1999 Constitution of the Federal Republic of Nigeria clearly states that “the security and welfare of the people shall be the primary purpose of government.” This is not optional—it is a constitutional obligation.
To fulfill this mandate, government must ensure that:
1. No citizen goes to bed hungry.
2. The elderly and vulnerable are adequately cared for.
3. Employment opportunities exist for all willing and able individuals.
4. Functional financial systems (banking and insurance) serve public/ private interest efficiently.
5. Reliable and affordable electricity is provided.
6. Access to healthcare is not determined by one’s financial capacity.
These responsibilities require substantial financial resources, which are often beyond what internally generated revenue and monthly allocation from Abuja can provide.
Borrowing as an Instrument of Development
In economics, public borrowing—when properly managed—is not inherently harmful. On the contrary, it is a legitimate fiscal tool for bridging resource gaps and financing long-term capital projects. The key issue is not whether government borrows, but how and why it borrows.A forward-thinking government should:
Invest in productive sectors such as agriculture, housing, infrastructure, and healthcare.Government can stimulate aggregate demand by ensuring income flows to households,
promote inclusive growth and reduce poverty.For instance, if a Government undertakes data-driven planning—identifying population segments such as youths, unemployed persons, retirees, and the working class—it can effectively allocate resources to maximize productivity. When citizens are gainfully employed, crime rates decline, economic activity expands, and overall welfare improves.
The Illusion of “No Borrowing”.
The “no borrowing” mantra, while politically attractive, can be misleading if it results in underinvestment in critical sectors. In a developing economy like Nigeria, where infrastructure deficits are significant, outright avoidance of borrowing may signal missed opportunities rather than fiscal discipline.
It is important to distinguish between:
Productive borrowing (for infrastructure, job creation, and economic expansion), and
Unproductive borrowing (for recurrent expenditure such as salaries or consumption).
The former drives growth and can repay itself over time through increased revenue, while the latter can lead to fiscal distress.
The Reality of Governance and Citizen Expectations.
A troubling reality is that many citizens have normalized government failure. Individuals provide their own water, security, electricity, and even basic infrastructure. This reflects a breakdown in the social contract.
Critical questions must be asked:
i. Does the government actively address unemployment?
b. Is there a clear strategy for improving power supply?
c. Are citizens genuinely benefiting from public resources?
In many cases, the answer is no.
Conclusion
Government must, where necessary, utilize borrowing as a strategic tool to organize the factors of production, stimulate economic activity, and fulfill its constitutional mandate. Avoiding borrowing entirely, especially in a resource-constrained environment, may reflect not prudence but a limited understanding of development economics.
That said, borrowing must be responsible, transparent, and tied strictly to productive investments—not to finance consumption or recurrent expenditure.
Ultimately, good governance is not measured by the absence of debt, but by the presence of development, improved welfare, and a better quality of life for the people.
Anaenugwu Ndubuisi
Ambassador General
Good Governance Ministry (GGM)
Email: ggovernanceministry@gmail.com
