Former World Bank President David Malpass has singled out Nigeria in a new policy paper, warning that the growing use of collateral-backed borrowing by developing economies is creating debt structures so opaque that future restructuring could become far more complex and costly than governments currently appreciate.
Malpass made the remarks in a World Bank Policy Research Working Paper titled "Public Debt and Central Banks," based on the Stanley Fischer Memorial Lecture delivered at the World Bank Group's Annual Bank Conference on Development Economics, warning that sophisticated collateralised transactions in Angola, Nigeria and Senegal are creating "a new race toward seniority in the capital structure."
The former World Bank chief argued that private sector transactions to distressed or high-risk sovereigns had become less transparent, and that such financing structures would make future debt restructurings more complex, with the growing use of multilateral frameworks adding another layer of complication to sovereign debt resolution.
The warning arrives at an awkward moment for Abuja. Nigeria's total public debt has climbed from ₦75 trillion to what the Finance Minister has acknowledged is approximately ₦159 trillion under the Tinubu administration, with debt service estimated at between ₦15.5 trillion and ₦15.9 trillion for 2026 alone. The World Bank has approved approximately $10.6 billion in facilities for Nigeria since June 2023, while the government's 2026 borrowing plan has ballooned to ₦29.2 trillion.
What Malpass's paper adds to that already well-documented picture is a specific concern about the less visible part of Nigeria's debt portfolio: the collateral-backed arrangements that do not carry the transparency requirements of multilateral concessional loans. When a sovereign uses oil receivables, future export proceeds, or other assets as collateral to secure financing, creditors in those structures enjoy seniority over other debt holders. That seniority reshapes the capital structure in ways that only become fully apparent when a country runs into repayment difficulty, at which point the existence of senior secured creditors can block orderly restructuring and entrench a payment hierarchy that leaves multilateral and bilateral creditors, and ultimately citizens, worse off.
The domestic political response to Nigeria's broader debt trajectory has already grown loud. Former Vice President Atiku Abubakar described the administration's borrowing as "reckless, opaque and dangerously habitual," while ordinary Nigerians have taken to the World Bank's own social media pages to urge the institution to stop approving new facilities. Finance Minister Taiwo Oyedele has pushed back on the characterisation, arguing that the increase in the headline debt stock reflects naira depreciation applied to foreign-currency obligations rather than pure new borrowing, and that debt for productive assets at returns above the cost of capital is rational financial management.
Malpass's paper does not engage the broader Nigerian political debate. What it does is add a former head of the World Bank to the list of voices warning that the structure of Nigeria's debt, not just its level, carries risks that are not yet adequately priced into how the country talks about its fiscal position. The level of debt is the number that appears in budget documents. The seniority architecture of that debt is the number that matters most when the music stops.
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