Nigeria’s rising debt profile, despite improving government revenues, presents a critical challenge that demands urgent action focused on transparency, fiscal discipline, and rigorous oversight to maintain debt sustainability.
The Speaker of the House of Representatives, Tajudeen Abass, sounded the alarm at a recent public forum, revealing that Nigeria’s public debt had surged to N149.39 trillion (approximately $97 billion) by the first quarter of 2025.
This escalation pushed the debt-to-GDP ratio to 52 percent, significantly surpassing the recommended ceiling of 40 percent.
The sharp increase from N121.7 trillion in 2024 highlights a growing fiscal burden and a continued reliance on domestic and foreign borrowing to fund public spending, despite notable improvements in government revenues, especially from non-oil sectors.
DMO data showed that Nigeria’s external debt grew by 26.07 percent year-on-year in the first quarter of 2025, reaching N70.63 trillion ($45.97 billion), up from $42.11 billion in the same period the previous year.
Similarly, domestic debt rose from N65.65 trillion in the first quarter of 2024 to N78.76 trillion by March 2025.
In the face of this rising debt, the National Assembly approved a new $21 billion external borrowing plan in July, proposed by President Bola Tinubu to fund key infrastructure projects, which has sparked concern across the polity.
In March, the World Bank approved $1.08 billion in concessional financing designed to improve education, nutrition, and household resilience among vulnerable communities.
Paradoxically, even as public debt climbs, government revenues are also rising, increasing by 34.7 percent in the first half of 2025, indicating a stronger fiscal performance.
However, these revenue gains are largely consumed by the existing debt burden, with about N8.93 trillion, representing 61 percent of total government revenue, allocated to debt servicing within nine months.
This allocation severely restricts funding for other essential sectors, including infrastructure, health, and education.
The trajectory of Nigeria’s debt has dramatically trended upwards over the years.
According to DMO data, Federal Government borrowings increased by 658 percent between 1999 and 2021, soaring from N3.55 trillion to N26.91 trillion.
Under former President Muhammadu Buhari, this increase was even more pronounced, with foreign debt rising by over 291 percent.
Following the 2023 general elections, Nigeria’s debt profile deteriorated rapidly, from N49.85 trillion to over N134.30 trillion a year.
By September 2024, public debt had reached N142.3 trillion, equivalent to around N624,527 per person.
Some economists predict that Nigeria’s public debt could hit N187.79 trillion by December.
Several factors have driven this troubling debt trajectory.
The DMO attributes higher borrowing costs on external debt to global shocks, including rising international interest rates and volatile commodity prices.
In addition, the depreciation of the naira has amplified the domestic currency value of foreign debts.
The absence of fiscal discipline marked by non-adherence to the Fiscal Responsibility Act 2007,whichlimits borrowings to capital investments and human development has further swollen the total debt stock.
While total public debt has decreased in dollar terms to $97 billion from $113 billion as of Q2 2023, the naira value has increased threefold within the same period.
Also, persistent weaknesses in revenue mobilisation and fiscal management have compelled the government to borrow heavily to cover fiscal deficits:The 2025 budget reveals a fiscal shortfall exceeding N14 trillion that necessitated additional bond issuances.
Adding to the complexity, sub-national debts pose significant challenges, as many states reportedly fail to state their true indebtedness, raising serious concerns over the completeness and transparency of Nigeria’s public debt data.
Regardless, the Federal Government has introduced a new debt management strategy outlined in the Medium-Term Debt Management Strategy for 2024–2027. It aims at ensuring debt sustainability, enhancing fiscal stability, and deepening the domestic securities market.
Developed with technical support from the World Bank and the IMF, the MTDS sets new benchmarks for debt sustainability across key fiscal and risk indicators.
The debt-to-GDP ratio is projected to rise from 52.25 percent at the end of 2024 to a ceiling of 60 percent by 2027, while interest payments are capped at 4.5 percent of GDP, up from 3.75 percent in 2024. Sovereign guarantees as a share of GDP are also capped at 5.0 percent, up from the current 2.09 percent.
The strategy aims to shift the domestic-to-external debt mix from the existing 48:52 ratio to a more favourable 55:45, reducing exposure to foreign exchange risks, with FX debt capped at 45 percent of total debt, down from 51.75 percent.
Refinancing risks will be contained through limits such as a maximum of 15 percent of debt maturing within a year, and total debt maturing as a share of GDP capped at 5.0 percent. The average maturity of the debt portfolio is set at a minimum of 10 years, ensuring longer repayment cycles.
While this new strategy aligns with the government’s increasing appetite for debt accumulation, even if necessary for economic growth, and charts a path toward medium-term debt sustainability, concerns about accountability and fiscal prudence remain imperative.
Finance Minister Wale Edun has acknowledged the rising debt figures but insists that ongoing reforms have strengthened fiscal discipline, improved revenue mobilisation, and will reduce reliance on borrowing over time.
Edun affirms that government borrowing is now purpose-targeted towards projects with clear returns and that the government has avoided inflationary finance mechanisms such as Ways and Means borrowings.
Despite this, there is a consensus among lawmakers, government officials, civil society, and the organised private sector that strong legislative scrutiny is essential to ensure responsible borrowing and transparency in expenditure.
For too long, government spending has trended towards salaries, overheads and showy infrastructure projects, many of which are poorly executed, while fundamental sectors such as health and education suffer from underfunding.
Nigeria’s 2025 health and education budgets stand at N2.48 trillion and N3.5 trillion, respectively, accounting for only 4.5 percent and 6.3 percent of the total budget.
The Auditor-General of the Federation, Shaaka Chira, has emphasised ongoing audits to verify and clarify the scale of debt, particularly focusing on compliance with borrowing laws and assessing whether borrowed funds yield tangible benefits for Nigerian citizens.
Abass has called for enhanced parliamentary oversight, improved public accessibility of debt reports, and open hearings on major loan proposals to foster accountability and ensure that borrowed funds generate measurable social and economic returns.
Senate President Godswill Akpabio similarly advocates for rigorous debt management combined with transparency, stressing these as essential tools to finance infrastructure, stimulate economic growth, and protect democratic institutions.
These proposals are sound, but the 10th NASS, often seen as a rubber stamp, must rise above political expediency by enforcing robust oversight over government finances and ensuring value-for-money contracts.
It must end the damaging practice of scandalous budgetary insertions that inflate the budget and increase Nigeria’s borrowing needs without delivering commensurate benefits.
Equally important is the need to reduce government wastage and overhead costs by trimming MDAs in line with the recommendations of the Oronsaye Report.
Tinubu should confront this challenge rather than creating positions for political allies and cronies.
Crucially, the government needs to accelerate efforts to boost non-oil revenues, which are currently on an upward trajectory.
This can be achieved through proper implementation of tax laws, addressing the numerous constraints stifling agricultural productivity, and strengthening the manufacturing and technology sectors, particularly focusing on power, logistics, and improving access to affordable credit.
