In a stark exposé of fiscal distress, Nigeria has funnelled an eye‑watering ₦30.81 trillion into debt servicing between 2020 and 2024, according to data released by the Debt Management Office (DMO).
Over the same period, the federation generated ₦51.05 trillion in revenue, meaning a crushing 60.35 per cent of public receipts went solely to interest payments, leaving a meagre 39.65 per cent for everything else—from roads and schools to hospitals and security.
A Jaw‑Dropping Surge
In 2020, Nigeria’s debt‑service bill stood at ₦3.34 trillion. It dipped slightly to ₦2.93 trillion in 2021, edged up to ₦3.76 trillion in 2022, then rocketed to ₦7.66 trillion in 2023, before leaping to ₦13.12 trillion in 2024.
During those five years, the country’s total debt profile exploded from ₦32.22 trillion to ₦144.67 trillion—a staggering 349 per cent increase.
At the current borrowing pace, this mountain of obligations is projected to swell to ₦187.79 trillion by the end of 2025.
External Loans on the Horizon
President Bola Tinubu is now seeking Senate approval for an additional US\$21.5 billion in external loans as part of the 2025–2026 borrowing strategy.
This includes a ¥15 billion facility from Japan and a €51 million grant, underlining the government’s continued reliance on foreign financing amid dwindling domestic revenues.
Revenue Versus Responsibility
The government maintains that Nigeria’s problem is not debt per se but chronically low revenue mobilisation—oil yields barely 8 per cent of GDP as of 2021—and that borrowing has been necessary to plug gaping budget deficits.
Yet critics argue that many of these loans have financed recurrent spending rather than capital projects, violating the Fiscal Responsibility Act of 2007, which restricts borrowing to capital investments and human development.
Analysts pushing for FRA reform urge the introduction of strict penalties for violations and an empowered Fiscal Responsibility Commission with real investigative teeth.
Historic Echoes of the 1980s
Nigeria’s current plight eerily mirrors the 1985–1990 debt crisis, when the ratio of debt‑service payments to export earnings soared from 0.7 per cent in 1980 to 33.1 per cent in 1985.
Without rescheduling, it would have breached 75 per cent by 1986 and 81 per cent in 1988—levels that precipitated draconian import cuts and economic hardship.
Today’s fiscal squeeze is similarly choking public investment and stalling growth.
Interest Rates Tighten the Noose
Globally rising interest rates have exacerbated Nigeria’s debt burden.
As commercial borrowing costs climb—often 500 per cent more on international markets than concessional loans—each new tranche of debt carries a fatter interest tab, tightening the chokehold on federal finances.
AfDB Alarm Bells
The African Development Bank has warned that Nigeria may spend up to 75 per cent of its revenues on interest payments in 2025, despite a public debt‑to‑GDP ratio projected at 47 per cent.
“A low debt‑to‑GDP ratio does not guarantee debt sustainability when such a large share of fiscal revenues is consumed by interest payments,” the AfDB’s 2025 African Economic Outlook cautioned.
A downturn in growth or further rate hikes could swiftly reverse any recent gains.
Social Services on Life Support
The opportunity cost of servicing this debt mountain is painfully clear in the 2025 budget allocations: debt servicing commands ₦16.327 trillion—more than the combined allocations for education (₦3.52 trillion), health (₦2.48 trillion), security (₦4.91 trillion) and infrastructure (₦4.06 trillion).
This is scandalous in a country where over ten million children are out of school and public hospitals crumble under underfunding.
Economic Shockwaves
With public coffers strained, the government’s capacity to respond to crises—from the energy transition to security threats—has been undermined.
Infrastructure projects stall, social safety nets wither, and millions of Nigerians are left navigating decaying roads and broken healthcare systems.
The Path Forward?
Experts advocate a multi‑pronged strategy:
Revenue Reform: Accelerate non‑oil tax collection, harness technology to plug leakages, and broaden the tax base.
Expenditure Rationalisation: Cut wasteful recurrent spending and channel borrowing strictly into high‑impact infrastructure with clear returns.
Debt Restructuring: Engage creditors in dialogues for reprofiling expensive commercial loans into concessional terms.
Fiscal Discipline: Strengthen enforcement of the Fiscal Responsibility Act and empower the Fiscal Responsibility Commission.
Transparent Oversight: Publish audited debt‑service reports quarterly and allow parliamentary committees real oversight powers.
A Fiscal Crossroads
Nigeria now stands at a fiscal crossroads. One path leads to a debt‑driven collapse, repeating the mistakes of past decades.
The other offers an opportunity for decisive reform: boosting revenues, curtailing waste, and forging credible, transparent partnerships with creditors.
For a nation blessed with vast resources and youthful dynamism, regularly sacrificing more than half its revenues on interest is unsustainable.
Without radical fiscal surgery, the promise of “Nigeria rising” risks being buried under a mountain of debt.
Additional reporting by Atlantic Post writer Taiwo Adebowale.
