Nigeria’s debt stress has reached its highest level on record, according to findings from the new Debt Burden Index, a composite metric designed to capture the country’s true fiscal pressure.
The report, released by the Nigerian Economic Summit Group (NESG) during its annual conference in Abuja, revealed that between 2020 and 2023, Nigeria’s index peaked at 83.6 points, reflecting the severe strain from pandemic-era borrowing, collapsing revenues, and debt service costs that exceeded total government revenue.
According to the report, Nigeria’s debt architecture has become structurally fragile and fiscally draining, highlighting the urgent need for reform.
As of August, Nigeria had spent $2.86 bn servicing external debt, slightly lower than the $3.06 bn spent in the same period in 2024. This figure represents 69.1 per cent of the country’s total foreign payments of $4.14 bn during the review period.
The report outlined four major phases in Nigeria’s debt trajectory between 2006 and 2024. The Post-Relief Compression period between 2006 and 2014 saw low index levels averaging below 10 points, supported by debt relief and strong oil revenues. The Debt Crisis Acceleration phase from 2015 to 2019 marked rising debt stress as oil shocks, increased domestic borrowing, and weak revenue mobilisation pushed the index above 30 points. Between 2020 and 2023, the Fiscal Exhaustion phase peaked at 83.6 points due to COVID-19 borrowing, revenue collapse, and debt servicing consuming over 100 per cent of income.
The Tentative Reversal phase in 2024–2025 showed mild easing to 70.9 points, estimated at 69.0 in the first quarter of 2025, helped by fuel subsidy removal and foreign exchange reforms, though fiscal strain remains acute.
The report noted that the index provides a more accurate picture of fiscal stress than the traditional debt-to-Gross Domestic Product ratio, as it integrates solvency, liquidity, and revenue capacity into a single measure.
“Nigeria stands at a critical juncture in its fiscal affairs,” the analysis stated. “While public debt metrics appear moderate by global standards, the index presents a more sobering reality, one of structural fragility and fiscal exhaustion driven by weak revenue mobilisation, rigid debt service obligations, and exposure to foreign exchange-sensitive liabilities.”
Despite the slight improvement in 2024, the report warned that rising debt burdens continue to erode fiscal space, constrain development spending, and threaten macroeconomic stability.
The group called for a fundamental realignment of borrowing practices, stronger fiscal institutions, and a decisive overhaul of the revenue framework.
“The pathway out of Nigeria’s debt vulnerability is not austerity,” the report noted, “but strategic statecraft anchored in transparency, productivity, and fiscal justice. Nigeria must recalibrate its entire fiscal architecture to serve the goals of growth, equity, and intergenerational sustainability.”
The Debt Burden Index was constructed using five internationally recognised indicators endorsed by the International Monetary Fund and the World Bank, including domestic and external debt-to-Gross Domestic Product ratios, debt service-to-exports, and debt service-to-revenue measures.
Beyond measurement, the index provides a framework for fiscal discipline, recommending that future borrowing be linked to productive, growth-inducing projects with measurable returns.
It also reaffirmed the urgency of domestic revenue reforms, including improving value-added tax efficiency, enforcing mining royalties, and implementing digitalised property taxation. The report further advocated for stronger private sector mobilisation through Public-Private Partnerships, equity-based infrastructure financing, and crowd-sourced investments in public goods.
It encouraged a national shift towards net worth-based debt management, ensuring that any increase in liabilities is offset by an equivalent or greater rise in national assets. Lastly, it called for deep institutional reforms to improve debt transparency, coordinate subnational borrowing, and enforce rules-based fiscal governance.
