Nigeria spent N30.81 trillion on debt servicing between 2020 and 2024, according to data obtained from the Debt Management Office (DMO).
The data also showed that during this period, the country generated a total of N51.05 trillion meaning that 60.35 per cent of the revenue was spent on debt servicing, leaving a paltry 39.65 per cent for other recurrent line items and capital expenditure.
In 2020, Nigeria spent N3.34 trillion on debt service, the figure declined to N2.93 trillion in 2021, edged up to N3.76 trillion in 2022, and jumped to N7.66 trillion in 2023 before spiralling to N13.12 trillion last year.
According to the DMO, the country’s total debt profile rose by 349 per cent from N32.22 trillion in 2020 to N144.67 trillion in 2024.
This figure is projected to hit N187.79 trillion by the end of 2025 given the rate at which the government is taking fresh loans.
President Bola Tinubu is requesting Senate approval for a new $21.5 billion external borrowing plan as part of the 2025–2026 borrowing strategy. The President is also seeking a ¥15 billion Japanese loan and a €51 million grant, indicating continued reliance on external financing.
While experts are worried that the country’s debt profile is heading towards an unsustainable stage, the government has argued that it does not have a debt problem but a low revenue issue.
Nigeria’s debt experienced a leap in the last two years owing basically to the increased borrowing by the government to finance budget deficits.
For example, between 2023 and 2024, the country’s external debt increased by 83.89 per cent from N38.22 trillion ($42.50 billion) in December 2023 to N70.29 trillion ($45.78 billion) in December 2024. Domestic debt also rose by 25.77 per cent from N59.12 trillion ($65.73 billion) at the end of December 2023 to N74.38 trillion ($48.44 billion) in December 2024.
Following the Naira devaluation in June 2023 and June 2024, the exchange rate fluctuated dramatically from about N460 to N1500 per dollar, increasing the burden on existing foreign obligations.
Experts blame fiscal discipline as a critical factor in Nigeria’s debt accumulation. Despite regulations such as the Fiscal Responsibility Act of 2007 (FRA), which mandates borrowing only for capital investments and human development, these guidelines have often been ignored or poorly enforced, resulting in excessive borrowing and not necessarily connected to productive investments. This is part of the argument of those pushing for the review of the FRA.
They noted that the FRA should include strict penalties for violation and the empowerment of the FRC with investigative and enforcement authority.
The rising interest rates have held the country’s debt servicing in a chokehold. Interest rates worldwide have risen, putting additional pressure on Nigeria’s capacity to handle its debt responsibly. The surge in borrowing costs has made it increasingly difficult for the government to meet its financial commitments without taking on more debt.
Recently, the African Development Bank (AfDB) raised the alarm that Nigeria’s rising debt costs were tending towards unsustainable levels, stating that the country is projected to spend 75 per cent of its revenues on interest payments in 2025.
