Nigeria’s external debt is on track to surpass $45 billion by January 2024, driven by the government’s recent plans to secure over $8.7 billion in external loans and €100 million in additional financing. These funds, part of the federal government’s 2022-2024 borrowing plan, aim to finance infrastructure projects, agriculture, and food security initiatives. Analysts suggest this could push Nigeria’s total external debt to approximately $51.75 billion .
As of mid-2023, Nigeria’s external debt stood at $43.16 billion, with domestic debt totaling ₦54.13 trillion. Combined, the country’s public debt reached ₦87.38 trillion ($91 billion) during the same period. This escalating debt profile has drawn criticism and concern from economists and financial experts. They highlight the risks of unsustainable debt servicing costs, which now consume a significant portion of government revenue, exceeding 50% in 2024 compared to 2023 .
The government has justified its borrowing, emphasizing that internal revenue alone cannot fund critical infrastructure and development projects at the required scale. Advocates argue that borrowing is essential for economic growth, provided the funds are used transparently and effectively. However, concerns linger about accountability and the potential misuse of funds. Stakeholders have called for stricter oversight mechanisms to ensure that loans are utilized for their intended purposes .
Nigeria’s debt management strategy involves collaboration with international financial institutions, including the World Bank and the International Monetary Fund (IMF), to fund key reforms and development initiatives. Recent borrowings have been targeted at climate resilience, healthcare, and governance reforms. Despite these efforts, critics warn of the growing financial strain posed by rising debt obligations, which could impact Nigeria’s fiscal stability and economic growth if not managed carefully .
The increasing debt burden has reignited debates about Nigeria’s fiscal policies and the need for more robust internal revenue generation. Experts suggest diversifying revenue sources, cutting non-essential expenditures, and improving the efficiency of public financial management to reduce the country’s reliance on external borrowing. As Nigeria approaches the $45 billion external debt mark, the government faces heightened scrutiny and pressure to implement effective debt utilization strategies that balance development needs with fiscal responsibility .
