Debt And Nigeria’s Revenue Challenge

Data from the Debt Management Office (DMO) for Q1 2025 indicates that Nigeria’s total public debt rose to N149.39 trillion as of March 31, marking a year-on-year increase of N27.72 trillion or 22.8 per cent when compared to the N121.67 trillion recorded in the corresponding period of 2024.
The data also indicates a quarter-on-quarter increase of N4.72 trillion or 3.3 per cent from N144.67 trillion as of Dec. 31, 2024.
This consistent upward trajectory in Nigeria’s debt stock reflects both fresh borrowings and the impact of a depreciating exchange rate on external debt obligations.
The federal and state governments owe a combination of domestic and foreign debts; domestic debt is made up of FGN securities and treasury bills.
Nigeria owes countries like China, France, Germany, and Japan (bilateral debts) and multilateral institutions like the World Bank, Islamic Development Bank (IsDB), and the African Development Bank (AfDB).
Latest data from the DMO shows that Nigeria has a total external debt of 45.9 billion dollars.
The external loans come from a diverse group of lenders and are categorised by the DMO; the first are multilateral lenders, which include the IMF, World Bank, and AfDB.
Nigeria owes the IMF 406 million dollars as of March, but has since paid down the entire loan, according to a statement by the Federal Government in May.
However, the country owes the World Bank 18.3 billion dollars, up from 17.8 billion dollars as of December 2025.
The next group of creditors is bilateral–mostly foreign countries that extend loans to Nigeria.
The biggest amongst them is China, with a total loan balance of 5.16 billion dollars out of the total external bilateral loans of six billion dollars.
France is second with 609 million dollars in loans.
There is also a group of commercial lenders, represented largely by Eurobonds, a dollar-denominated bond floated by the Federal Government.
Nigeria’s Eurobond remained at 17.32 billion between December 2024 and March 2025.
A summary of the country’s external debt obligation shows that it owes multilateral lenders 22.5 billion dollars, bilateral Lenders – 6.7 billion dollars and commercial Lenders – 17.32 billion dollars.
Data from the DMO also shows that Nigeria has a total domestic debt of N78.76 trillion at the end of March.
The domestic portfolio is made up of various instruments, namely FGN bonds, Nigerian Treasury Bills, FGN Sukuk, FGN Saving Bonds, FGN Green Bonds and Promissory Notes.
FGN Bonds constitute 79.85 per cent of the total domestic debt, which amounts to N59.8 trillion. This includes both FGN Naira and dollar Bonds.
The second largest domestic creditors are holders of Nigerian Treasury Bills with a total debt of N12.7 trillion.
They constitute 16.96 per cent of the total domestic debt. This is followed by Promissory Notes with a total sum of N1.301 trillion.
FGN Sukuk bonds remained steady at N992.6 billion during the period of December 2024 to March 2025, according to DMO data; the bonds are used to fund infrastructure projects like roads and bridges in the country.
Records show that FGN’s saving bonds come next with a total debt of N82.6 billion in March 2025.
Also, FGN Green Bonds constitute the least, with a total debt of N15 billion, and have remained this way since December 2022.
The Senate recently approved President Bola Tinubu’s fresh external borrowing plan of over 21 billion dollars for the 2025–2026 fiscal cycle, paving the way for the full implementation of the 2025 Appropriation Act.
With the country’s debt on a 22.8 per cent year-on-year increase, analysts caution that broader sustainability remains a concern.
Some analysts have also expressed concerns over federal government’s fiscal regime, describing the increase in debt servicing from N8 trillion in 2024 to N16 trillion in 2025 as a red flag.
To reduce dependency on borrowing, Nigeria will need to expand non-oil revenues, rein in recurrent spending and deepen structural reforms.
A Development Economist, Prof. Ken Ife, said adherence to extant fiscal responsibility law would go a long way to moderate government borrowing and reduce Nigeria’s debt profile.
Ife, Lead Consultant on Private Sector Development to the ECOWAS Commission, said that there was lack of transparency and accountability, and inadequate prudence in borrowing for development.
“We need borrowing because we are called underdeveloped countries and developing countries; what it means is that you cannot survive without growing your economy.
“We must grow our economy and that means that we must borrow to leverage, but there is no room for us to borrow to consume.
“That will deepen exposure to debt and then drive us inexorably into more fiscal deficit,” he said.
According to him, there is nothing wrong with borrowing, but the question is, where do we employ this borrowing?
“Where do we put the money? How do we use the money that we borrow? That is one question that we have not answered.
“It means the borrowing is for consumption, and because it is for consumption, nothing has been produced,” he said.
He urged the Federal Government to strictly implement the fiscal responsibility law which stipulated that government borrowing should be for development.
“When it comes to capital expenditure, the law looks at infrastructure, and that means investing in productive capacity; something that will be capable of repaying the loan.
“Also, the law wants cost-benefit analysis, it also anticipates that when you are going to build infrastructure, you should be considering economic corridors.
“You should be considering industrial corridors, commercial corridors, residential corridors, so that the infrastructure will to be fully utilised,” he said.
A financial expert, Prof. Uche Uwaleke, said the country’s rising debt profile was the direct result of low domestic resource mobilisation.
Uwaleke is the director, Institute of Capital Market Studies, Nasarawa State University, Keffi.
According to him, the weak structure of the economy which unduly relies on revenues tied to the vagaries of the international crude oil market is also responsible for the debt profile.
He said the growing debt profile may be justified by the huge infrastructure gap in Nigeria.
“Government borrowing in itself is not bad for a developing economy struggling to plug infrastructure gap.
“However, it becomes unsustainable when debt service ratios are very high.
“The implication is huge opportunity cost considering the fact that critical sectors requiring attention such as education and health are starved of funds,” he said.
According to him, the Fiscal Responsibility Act 2007 clearly spells out that government borrowing must be for long-term, concessional in nature, and applied to capital projects and human capital development.
He said that tying government loans to self-liquidating projects would ensure sustainability.
“Regrettably, the FRA 2007 has no enforcement provisions; it needs to be amended to make it difficult for any tier of government to borrow for purposes outside of the ones stipulated,” he said.
A former president of the Chartered Institute of Bankers of Nigeria (CIBN), Mr Okechukwu Unegbu, said the country’s debt profile was very embarrassing.
Unegbu also called for fiscal prudence and effective deployment of earned revenue to reduce the dependence on borrowing.
Policy analysts say Nigeria’s debt predicament has risen to concerning heights; with forecasts suggesting that the nation’s overall debt could reach N187.79 trillion by the end of 2025.
They say there is need for fiscal discipline, economic diversification, improved debt management practices, and adequate financial governance. NAN