Former World Bank President David Malpass has criticized Nigeria’s use of collateral-backed borrowing, warning that the approach could create problems if the country needs to restructure its debt in the future. His concern centers on the way such loans can reduce flexibility when governments are trying to manage repayment pressure.
Malpass said collateral-backed borrowing can make debt workouts more difficult because some obligations may be tied to specific assets, revenue streams, or repayment protections. That can complicate negotiations and make a broader restructuring process harder to carry out smoothly.
The criticism also touches on debt sustainability. A borrowing strategy that relies heavily on collateral-backed deals may provide funding in the short term, but it can raise longer-term concerns about how easily a country can adjust its debt profile during financial stress.
His remarks add to the wider debate over Nigeria’s debt management strategy and the balance between raising funds and preserving room to respond to future challenges. The issue is likely to remain important as policymakers weigh financing needs against the risks attached to more restrictive forms of borrowing.
