AS at December 2024, Nigeria’s public debt, including domestic and external debt commitments stood at N144.67 trillion (over $144.67 billion). The country’s debt profile has since been on a steady increase with a National Assembly that is ever practically in a hurry to grant blank approvals to the President for more borrowings.
The nation’s debt commitment includes N70.29 trillion in external debt and N74.38 trillion in domestic debt. Many have considered the continuous borrowing spree as fiscally irresponsible bordering on prodigalism and profligacy, economically unsustainable as it is unjustifiable , remaining antithetical to development and morally reprehensible.
The renewed general worry about Nigeria’s debt burden stems from the palpable fear that the nation is gradually collapsing under the weight of borrowed survival, which is tantamount to a steady postponement of an imminent doomsday. In a surprising development however, the Presidency has come up with a somewhat uncanny defence of its borrowing strategy as a necessary, almost inevitable tool for economic development, insisting that borrowing, when used judiciously, is not a sin.
The intriguing question in Nigeria’s debt burden context however is, how judicious has the Federal Government been deploying the borrowed funds? What are the development or life enhancing projects we can establish their link to these loans Many, however, think the time has come for Nigeria to opt for a diversified, functioning economy instead of the current avid penchant to continue to borrow to fund a non performing national budget through an over bloated government structure. The current cycle is said to be fiscally non -sustainable.
The total debt had increased significantly from N49.85 trillion in Q1 2023 to N142.91 trillion by September 2024, Total public debt stood at N144.67 trillion (over $144.67 billion) as at December 2024.
External debt also stood at N70.29 trillion as at December 2024 while Domestic debt stood at N74.38 trillion as at same period. External Debt also stood at $94.23 billion as at December 2024, reflecting a nominal decrease of 17 percent compared to $113.42 billion in June of 2023.
On the average, Nigeria’s debt commitment has been steadily on the increase, particularly since President Tinubu mounted the saddle after the 2023 general elections.
With the current rate of ready resort to debt, Nigeria must brace up for imminent national insolvency. It still can be recalled how Fitch Ratings downgraded the country ‘s credit outlook in 2024, citing unsustainable debt trajectory.
The increase in accumulated national debt has been attributed to both external and domestic borrowing, a consumptive economy amidst rapidly growing population.
Agriculture has suffered significant setback with increased wave of untamed insecurity.Penultimate week, President Bola Tinubu sent another request to the National Assembly seeking approval for additional external and domestic loans totaling N34.15 trillion.
Keen followers of the nation’s economic trend consider this to be one loan approval request too many. The presidency however, thinks in the very opposite direction.
Rationalizing the chosen path of increased debt commitment, Special Adviser to the President on Information and Strategy, Mr Bayo Onanuga maintained that Nigeria’s debt profile and the penchant for more debt is not a sin. His words : “It is not a sin to borrow. Even developed nations like the United States of America, USA and the United Kingdom, UK, borrow beyond their GDP. The issue is not borrowing; it is what you do with the borrowed funds.
Nigeria’s debt profile has been predicted to hit N187.8trn this year amid rising borrowing costs and servicing implications .The debt service cost implies a debt-service-to-revenue ratio of 162 percent, up from the 128 percent reported in H1 ‘23.
After the 2023 general elections, Nigeria’s debt deteriorated significantly, increasing from N49. 85 trillion to over N134. 30 trillion. At the end of June 2023, the DMO reported that Nigeria’s total external debt stood at N33. 25tn, while domestic debt was N54. 13tn.
The Nigerian economy in particular has continued to experience strains and stresses arising largely from debt burden and debt overhang.
In the first quarter of 2025, debt servicing consumed over 90 percent of federal retained revenue While nations borrow to execute life transforming projects, Nigeria is borrowing to pay salaries, borrowing to run ministries, borrowing to maintain inefficiency in governance. This is not how to show creativity or demonstrate resourcefulness in governance. We may after all be passing through a slow national asphyxiation.
It has therefore become imperative for the President to reduce borrowing by decentralizing development efforts, assigning clear responsibilities for primary healthcare, basic education, and rural infrastructure to states and local governments,
We should as a country incentivize state-led innovations through competitive development strategy grants from the federal government and development partners.
By 2050, Nigeria will become the 3rd most populous country in the world, but a population in an unproductive economy becomes a burden, not a blessing .
The IMF and World Bank have also warned that continued borrowing will make Nigeria ineligible for concessional finance and investment guarantees It still can be recalled how the Senate in the last quarter of 2024, through a ceremonial voice vote granted the request of President Bola Tinubu to borrow $2.2 billion (about N1.77 trillion) from external sources in a move that is consistent with FG’s economic disposition of poor productivity initiatives, unrestrained profligacy and uncouth penchant for borrowing. That development came in the same week that the President cried to the IMF to extend more credit facilities to Nigeria as the only option left for the oil rich country to retain her children in schools.
Nigeria is currently maintaining her position as the third most indebted nation in the world after India and Bangladesh. Maybe the point also needs to be made here in the light of Bayo Onanuga’s position that the United States of America, China and Japan do also obtain facilities from the World Bank and other international credit agencies to further fund development projects to maintain their lead, in terms of infrastructure build up and socioeconomic development. It is however an economic sin to borrow to fund profligacy.
Nigeria is saddled with the reign of fiscal recklessness where loans are sought for to sustain a particular spending pattern and pedigree. The loan request, the President said, is part of a fresh external borrowing plan to partially finance the N9.7 trillion budget deficit The truly agonizing paradox is that Nigerians are currently overtaxed and Tinubu confirmed this much in July 2024 when he boasted that the FIRS and the customs had collected an all time revenue with which to finance the budget.
Despite the essential role debt plays in enabling structural transformation and development, the rate at which Nigeria’s debt is rising has the tendency to constrain the country’s ability to generate sufficient growth, cope with emerging crises, and invest for development. In 2023, Nigeria’s debt reached $108.3 billion. Most of the new debt coming has been externally obtained leading to an increase in the risk of the burden of that debt becoming unsustainable.
There’s no way we can expect our local currency, the Naira to get stronger in terms of value in the exchange rate with this current debt burden. This is because global financial pressures have weakened local currencies and increased interest rates, thus increasing the cost of servicing that debt in real terms.
The high borrowing cost and rising debt is also hindering Nigeria’s ability to finance its development agenda. Increasing amounts of public revenue allocated for debt servicing purposes while critical sectors such as health and education are recording major setback. With interest payments gulping down public revenue, it has become a matter of urgency for policymakers, researchers, and development practitioners to put forward solutions capable of stemming the crisis.
The Central Bank of Nigeria (CBN) recently said that it cost the Federal Government $3.58 billion to service foreign debt in the first nine months of 2024.
The CBN report on international payment statistics showed that the amount represents a 39.8 per cent increase from the $2.56 billion spent during the same period in 2023.
