Public Debt Soars, Default Fears Rise

Nigeria's public debt has surged to historic levels, fueling fears of a looming debt crisis and the potential for sovereign default.

- BY NIYI JACOBS

Over the last decade, the country's debt burden has expanded dramatically, rising by more than 1,000% in naira terms—from 12.6 trillion in 2015 to 144.7 trillion in 2024. Analysts warn that without urgent fiscal reforms, the country risks becoming trapped in a vicious cycle of borrowing to repay past loans, undermining its economic stability and long-term growth prospects.

While the dollar value of Nigeria's debt increased more modestly—from $65.43 billion in 2015 to $94.23 billion in 2024, representing a 44% rise—the naira's collapse has severely inflated the real cost of debt repayments. Over the same period, the naira has depreciated by an astonishing 697%, falling from 192.63/$ in 2015 to 1,535.32/$ in 2024. This means that although the dollar amount of Nigeria's foreign debt has not ballooned significantly, the amount required to service that debt in local currency has grown exponentially.

Nigeria's rising debt burden is exacerbated by its continued reliance on borrowing to finance budget deficits. In early 2025, President Bola Tinubu requested National Assembly approval for a fresh $21.5 billion in external loans, a ¥15 billion Japanese facility, and a €51 million grant, forming part of the administration's two-year borrowing strategy. This is occurring even as economists raise alarms about the sustainability of the nation's fiscal trajectory.

David Adonri, Vice Chairman at Highcap Securities, paints a grim picture of the current state of public finance. According to him, in just two years of the Tinubu administration, Nigeria's debt has nearly doubled the total incurred under the previous government's eight-year term. He warns that while domestic debt may be funded through central bank overdrafts—commonly referred to as "Ways and Means"—this tactic carries the severe risk of hyperinflation.