Nigeria’s total public debt surged to N142.3 trillion as of September 30, 2024, marking a 5.97% increase (N8.02 trillion) from N134.3 trillion in June 2024. This rise reflects both external and domestic debt obligations, significantly impacted by the depreciation of the naira against the dollar.
According to data from the Debt Management Office (DMO), external debt in dollar terms saw a marginal increase of 0.29%, moving from $42.90 billion in June to $43.03 billion in September. However, in naira terms, external debt rose sharply by 9.22%, climbing from N63.07 trillion to N68.89 trillion, primarily due to the exchange rate weakening from N1,470.19/$ to N1,601.03/$ during the period.
Meanwhile, domestic debt declined by 5.34% in dollar terms, dropping from $48.45 billion to $45.87 billion. However, when converted to naira, domestic debt increased by 3.10%, rising from N71.22 trillion to N73.43 trillion. The Federal Government held the bulk of external debt at $38.12 billion, while states and the Federal Capital Territory (FCT) accounted for $4.91 billion. Similarly, for domestic debt, federal obligations rose from N66.96 trillion to N69.22 trillion, with state and FCT debts recording a slight decline from N4.27 trillion to N4.21 trillion.
Despite the increase in naira-denominated debt, Nigeria’s total public debt in dollar terms dropped by 2.70%, moving from $91.35 billion in June to $88.89 billion in September. However, the continued depreciation of the naira has heightened concerns over debt sustainability, as external obligations become costlier in local currency.
An analysis of the Federal Government’s domestic debt stock, which stood at N69.22 trillion as of September 30, 2024, indicates a growing reliance on domestic borrowing. This increase was largely driven by a rise in Federal Government bonds and promissory notes. Bonds accounted for the largest share of domestic debt, growing by 4.47% from N52.32 trillion in June to N54.65 trillion in September, representing 78.95% of the total domestic debt stock. The issuance of dollar-denominated bonds also contributed to this rise, adding N1.47 trillion to domestic obligations.
Additionally, Nigerian Treasury Bills, the second-largest debt instrument, saw a slight decline of 0.66%, falling from N11.81 trillion to N11.73 trillion. This reduction may reflect efforts to manage short-term debt risks amid rising interest rates. Meanwhile, promissory notes used to settle government obligations increased by 5.80%, reaching N1.77 trillion in September.
The Federal Government’s growing reliance on domestic borrowing is evident in other debt instruments as well. Sukuk bonds, primarily used for infrastructure financing, decreased by 9.14% to N992.56 billion, while Savings Bonds, targeted at retail investors, rose by 16.11% to N64.09 billion. The Green Bond component remained unchanged at N15 billion, making up a minor portion of domestic debt.
Economic analysts have repeatedly raised concerns over Nigeria’s rising debt burden, particularly as interest payments consume a significant share of government revenue. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Public Enterprises, warned that the country risks falling into a debt trap if borrowing trends continue at this pace. He emphasized the need to reduce foreign debt exposure, given the sharp increase in naira obligations due to currency devaluation.
In terms of external debt, multilateral obligations remained dominant, increasing slightly by 0.67% from $21.62 billion to $21.77 billion, largely due to additional disbursements from institutions like the World Bank’s International Development Association, which contributed an additional $513.06 million. Bilateral loans, primarily from China, France, and Germany, fell by 1.33%, with China’s share dropping by $99.98 million. Meanwhile, commercial loans, mainly Eurobonds, remained steady at $15.12 billion.
Nigeria’s recent move to re-enter the international capital markets resulted in a $2.2 billion Eurobond issuance in December 2024. The bond sale, which saw over $9 billion in subscriptions, was aimed at addressing the fiscal deficit. The allotments included a $700 million 6.5-year bond priced at 9.625% and a $1.5 billion 10-year bond at 10.375%. These new borrowings are expected to further increase the country’s external debt when Q4 2024 data is released.
The Federal Government has reiterated its commitment to boosting revenue generation to finance infrastructure and support economic growth. During the defence of his ministry’s 2025 budget estimates, Minister of Budget and Economic Planning, Abubakar Bagudu, credited President Bola Tinubu’s administration for steering the economy in the right direction. He emphasized that the government remains focused on sustaining reforms and reducing dependence on external borrowing.
Bagudu highlighted that Nigeria’s GDP had consistently grown above 3% for three consecutive quarters and noted a reduction in the fiscal deficit from 6.1% in 2023 to under 4% in 2024. He also assured lawmakers that revenue-enhancing strategies, including the expansion of petroleum, solid minerals, and creative industries, would help meet fiscal targets.
Additionally, the government has outlined plans to finance critical infrastructure projects through initiatives such as the Renewed Hope Infrastructure Fund, Consumer Credit schemes, and agriculture and mortgage financing programs. Bagudu urged the National Assembly to pass key tax reform bills, which are seen as crucial to achieving the administration’s 18% revenue-to-GDP target.
Despite these measures, concerns persist regarding the sustainability of Nigeria’s growing debt. Analysts warn that while domestic borrowing may provide temporary relief, the long-term cost of debt servicing could place further strain on government finances. The modest reduction in short-term debt instruments like Treasury Bills may help mitigate refinancing risks, but heavy reliance on bonds and promissory notes could raise future obligations.
In conclusion, while Nigeria’s rising debt profile reflects the government’s efforts to finance development and manage economic challenges, the increasing burden, especially in naira terms, underscores the need for prudent debt management strategies. Balancing fiscal responsibility with economic growth remains a critical challenge for policymakers as they navigate the country’s evolving financial landscape.
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