In 2024, Nigeria spent a total of N13.12 trillion on debt servicing, marking a 68% increase from the N7.8 trillion spent in 2023, according to data from the Debt Management Office.
This expenditure surpassed the ₦12.3 trillion initially allocated in the budget for debt servicing, highlighting the growing strain of debt obligations on the country’s fiscal sustainability.
For 2025, the Federal Government has set aside N16 trillion for debt servicing, reflecting its expectation of continued heavy debt-related costs amidst rising borrowing expenses and an increasing debt burden, which is further challenging the country’s fiscal position.
The PUNCH’s analysis reveals that Nigeria’s domestic debt servicing in 2024 amounted to N5.97 trillion, a 14.15% increase from N5.23 trillion in 2023. This rise is attributed to higher interest rates and increased domestic borrowing.
On the external front, Nigeria’s debt servicing cost reached $4.66 billion (₦7.15 trillion at the exchange rate of ₦1,535.32/$1), reflecting a significant 167% rise from the ₦2.57 trillion spent in 2023. The increase in external debt service is attributed to rising global interest rates and the depreciation of the naira, which has made dollar-denominated debt more expensive.
While external debt service costs saw a sharp rise, domestic debt still accounted for the largest share of Nigeria’s debt servicing. Domestic debt servicing in 2024 rose by 36.27% to N5.97 trillion, up from N4.38 trillion in 2023, representing a substantial N1.59 trillion increase.
The bulk of the domestic debt servicing went to Federal Government Bonds, which accounted for N4.69 trillion, or 78.59%, of the total domestic debt service. This represents a 28.2% increase from N3.66 trillion in 2023.
Additionally, Nigeria spent ₦747.15 billion on Treasury Bills, a 129% increase from ₦326.12 billion in 2023, reflecting a growing interest burden from short-term borrowing. Other significant contributors to the debt service included Federal Government Savings Bonds, FGN Sukuk Bonds, and the FGN Green Bonds.
On the external side, Nigeria’s external debt service rose by 33% from $3.5 billion in 2023 to $4.66 billion in 2024, driven by commercial creditors, including Eurobonds, which accounted for $1.47 billion of the external debt service, or about 31.5% of the total external servicing.
Bilateral creditors, notably China’s Exim Bank, also accounted for a significant portion of Nigeria’s external debt servicing. However, some states, like Lagos and Kaduna, have reduced their external debt levels, with Lagos remaining the largest debtor among states.
Experts have warned of the escalating fiscal risks due to increasing debt obligations and have urged for more effective revenue generation and strategic debt management.
Despite these challenges, Vice President Kashim Shettima assured us that the federal government will reduce its borrowing and focus on productive and sustainable ventures. He emphasized that ongoing fiscal reforms, particularly in public-private partnerships and organic revenue generation, are helping reduce wasteful borrowings and improve the efficiency of the nation’s budgeting process.
