Nigeria spent a massive N13.12 trillion to service its debts in 2024—an alarming 68% jump from the N7.8 trillion recorded in 2023, according to fresh data from the Debt Management Office (DMO).
This figure exceeds the Federal Government’s budgeted allocation of N12.3 trillion for debt servicing, reflecting growing financial pressure and concerns about the sustainability of Nigeria’s fiscal policies.
Debt experts and analysts say the situation is troubling. Lagos-based financial analyst, Abdulrahman Sani said, “When your debt servicing cost surpasses what was budgeted, that’s a clear red flag for any economy. It means the government is spending more just to pay back loans instead of funding education, healthcare, or infrastructure.”
Domestic and External Debts on the Rise
Out of the total N13.12 trillion, domestic debt servicing accounted for N5.97 trillion—a 14.15% increase from N5.23 trillion in 2023. External debt servicing saw an even sharper rise. Nigeria paid $4.66 billion, which equals about N7.15 trillion at the 2024 exchange rate, marking a staggering 167% increase from N2.57 trillion in 2023.
Experts attribute the spike in external debt servicing to a combination of rising global interest rates and the falling value of the naira.
Economic consultant Mfon Essien explained, “Dollar-denominated loans are now more expensive to pay back because of the naira’s depreciation.”
Federal Government Bonds Take the Lead
Within domestic debt, the government paid N4.69 trillion on Federal Government Bonds alone—nearly 79% of the domestic debt total. This was a 28.2% increase from the previous year. The government also paid N747.15 billion on Treasury Bills, compared to N326.12 billion in 2023, an increase of 129%.
Other payments included N6.38 billion on Federal Government Savings Bonds, N158.43 billion in FGN SUKUK Bond rentals, and N2.18 billion on Green Bonds.
Though repayments on promissory notes slightly declined by 4.08% to N265.86 billion, domestic bondholders remained the biggest winners, showing how much the government relies on long-term borrowing.
Commercial and Multilateral Creditors Dominate External Payments
On the external front, commercial creditors—especially holders of Nigeria’s Eurobonds—received $1.47 billion. Eurobonds alone accounted for $1.15 billion or 78.5% of commercial debt payments.
Multilateral institutions such as the International Monetary Fund (IMF) and the World Bank got the lion’s share of multilateral repayments. The IMF received $1.63 billion, while the International Development Association was paid $663.23 million. Payments to multilateral creditors rose by 112.4% from $1.23 billion in 2023 to $2.62 billion in 2024.
Bilateral creditors were paid $570.67 million, with China’s Exim Bank taking $362.60 million, the largest chunk. France and Germany also received smaller amounts.
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States Reduce External Debts, But Lagos Still Leads
While the federal government’s debt is growing, many Nigerian states have managed to reduce their external debt burden. As of December 31, 2024, the combined external debt of Nigeria’s 36 states and the Federal Capital Territory dropped to $4.80 billion from $4.61 billion the year before—a 4.12% decrease.
Lagos State, although still Nigeria’s most indebted state, reduced its external debt from $1.24 billion to $1.17 billion. Kaduna State, on the other hand, increased its debt from $0.59 billion to $0.63 billion. Edo State followed suit, rising from $0.31 billion to $0.38 billion.
Rivers State saw one of the most significant increases, from $80.94 million to $199.58 million—a jump of nearly 147%.
Some states significantly reduced their debt levels. Jigawa dropped from $25.80 million to $23.34 million, and Yobe decreased from $21.49 million to $19.73 million. Enugu State recorded one of the highest reductions, falling from $120.45 million to $87.05 million.
Government Promises to Borrow Less
Despite these rising figures, Vice President Kashim Shettima has assured Nigerians that the government is now borrowing less than in the past.
Speaking at an event organised by the Association of National Accountants of Nigeria and the Chartered Institute of Taxation, Shettima—represented by Dr. Tope Fasua, Special Adviser on Economic Affairs—explained that Nigeria’s borrowing strategy is being restructured.
He said, “Our budget deficit for 2025 is N13 trillion out of a total N55 trillion budget, which is just 23.6%. This is the lowest in many years. We are now focused on working down the deficits and avoiding low-value, unproductive borrowings.”
According to Shettima, the government plans to explore other financing options like public-private partnerships and improving local revenue generation to reduce dependence on debt.
“Though we cannot stop borrowing immediately due to our infrastructure needs and financial commitments, we are committed to using borrowed funds for productive purposes,” he added.
Experts Call for Urgent Reforms
With debt servicing now consuming a significant chunk of Nigeria’s budget, financial experts are urging the government to act fast.
An economic analyst Ngozi Okonkwo said, “This is unsustainable. We need to raise more revenue internally and stop borrowing for consumption. Otherwise, we risk mortgaging the future.”
As Nigeria prepares to spend even more—N16 trillion—for debt servicing in 2025, citizens and economists alike are hoping the government keeps its word on reducing borrowing and focusing on productive investments.
Okonkwo said, “The warning signs are clear. It’s time to fix the roof before the rain starts pouring.”