Nigeria’s public debt escalated significantly in 2024, reaching a staggering N144.67 trillion ($94.23 billion) by the end of December. This represents a substantial 48.58% surge compared to the N97.34 trillion ($108.23 billion) recorded at the close of 2023. The Debt Management Office (DMO) report attributes this increase to a combination of factors, primarily substantial growth in both external and domestic borrowings. The final quarter of the year alone witnessed a 1.65% rise, underscoring the relentless upward trajectory of the nation’s debt burden. This escalating debt poses significant challenges to Nigeria’s economic stability and long-term fiscal sustainability, raising concerns among economists and policymakers.
A deeper analysis reveals a concerning trend in the composition of Nigeria’s debt. External debt experienced a dramatic 83.89% increase, climbing from N38.22 trillion ($42.50 billion) in December 2023 to N70.29 trillion ($45.78 billion) in December 2024. This sharp rise is attributed to new borrowings from international financial institutions and the adverse impact of naira depreciation against the US dollar, which effectively increased the naira value of dollar-denominated loans. While domestic debt also witnessed a considerable increase, growing by 25.77% from N59.12 trillion ($65.73 billion) to N74.38 trillion ($48.44 billion) within the same period, the rate of growth was significantly lower than that of external debt. This disparity highlights the increasing reliance on external financing, exposing the Nigerian economy to greater vulnerability to global economic shocks and currency fluctuations.
The federal government remains the primary driver of debt accumulation, with its share of domestic debt expanding by a substantial 32.19%, reaching N70.41 trillion by December 2024. This reliance on domestic borrowing underscores the government’s continued efforts to finance its budget deficits and fund crucial infrastructure projects. Contrastingly, the combined domestic debt of states and the Federal Capital Territory (FCT) decreased by 32.27%, declining from N5.86 trillion to N3.97 trillion. This reduction suggests a more cautious approach to debt management by subnational governments, possibly influenced by fiscal constraints and a greater awareness of the risks associated with excessive borrowing.
Examining the quarterly data provides further insight into the dynamics of Nigeria’s debt accumulation. Between September and December 2024, the total public debt increased by N2.35 trillion, a 1.65% rise. This growth was fueled by both external and domestic debt components, with external debt rising by N1.4 trillion due to new foreign loans and ongoing naira depreciation. Domestic debt experienced a more modest increase of 1.29%, reaching N74.38 trillion by the end of December. While the federal government’s domestic debt continued to grow during this period, the debt held by states and the FCT actually decreased, further reinforcing the diverging borrowing trends between federal and subnational levels.
By the end of 2024, Nigeria’s debt structure exhibited a relatively balanced split, with external debt accounting for 48.59% and domestic debt representing 51.41% of the total. However, the rapid growth of external debt, fueled by new borrowings and the weakening naira, raises concerns about the nation’s long-term debt sustainability. The increasing reliance on foreign loans exposes Nigeria to the risks of exchange rate volatility and potential difficulties in servicing its debt obligations should global economic conditions deteriorate. The breakdown of external debt reveals that the federal government accounts for the lion’s share, holding N62.92 trillion ($40.98 billion), compared to N7.37 trillion ($4.80 billion) held by states and the FCT. Similarly, within the domestic debt segment, the federal government holds N70.41 trillion ($45.86 billion), while states and the FCT account for a much smaller portion, N3.97 trillion ($2.58 billion).
The substantial increase in Nigeria’s public debt, particularly the surge in external borrowing, has prompted concerns among economic analysts about the country’s fiscal stability and long-term economic prospects. The depreciating naira exacerbates the challenges of servicing external debt, potentially diverting scarce resources away from essential public services and development initiatives. Managing this escalating debt burden and mitigating the associated risks will require prudent fiscal policies, including measures to strengthen revenue generation, enhance expenditure efficiency, and promote sustainable economic growth. Furthermore, strategies to diversify the economy and reduce reliance on volatile commodity exports will be crucial for strengthening Nigeria’s resilience to external shocks and ensuring long-term debt sustainability.
