Nigeria's Public Debt: A Looming Crisis

Estimated Reading Time: 8 minutes

Key Takeaways:

• Nigeria’s public debt is forecasted to exceed ₦180 trillion.
• President Bola Tinubu is seeking new loans totaling ₦34 trillion.
• Concerns about debt sustainability and accountability are rising.

Table of Contents

1. Current Debt Status and Projections
2. Debt-to-GDP Ratio and Economic Impact
3. Concerns and Criticism
4. Relation to the GistReel Article
5. Conclusion
6. FAQs

Nigeria’s public debt is projected to hit around ₦180 trillion as President Bola Tinubu seeks fresh loans totaling approximately ₦34 trillion (about $21.5 billion) to fund critical sectors, including infrastructure, agriculture, health, education, water supply, security, and employment generation. This significant borrowing request has been presented to Nigeria’s National Assembly for approval, raising questions regarding the country’s debt sustainability and economic future.

Current Debt Status and Projections

Overview of Nigeria's Debt

As of December 31, 2024, Nigeria’s total public debt stood at around ₦144.7 trillion (~$94.2 billion) [8]. Here’s how this has evolved:

• Nigeria’s total debt stock sharply rose from ₦49.85 trillion prior to the 2023 general elections to ₦134.3 trillion by mid-2024 [5].
• Analysts predict that Nigeria’s debt could escalate to ₦187.79 trillion in 2025 due to ongoing borrowing and pressures from currency depreciation [5].
• About ₦63 trillion (approximately $43 billion) is owed externally as of Q2 2024, which constitutes nearly half of the total debt stock [5].

Breakdown of Debt Composition

• Domestic Debt: Accounts for 53% of the total debt profile, with the Federal Government holding the majority share domestically, totaling ₦66 trillion [5].
• Foreign Debt: Almost half of Nigeria's debt is external, which can be more burdensome due to currency fluctuations and interest rates [6].

This drastic increase signifies a critical moment for Nigeria’s economic health and financial future.

Debt-to-GDP Ratio and Economic Impact

Understanding Nigeria's Debt-to-GDP Ratio

As of September 2024, Nigeria's government debt accounted for approximately 53.8% of its nominal GDP, an increase from 52.8% the previous quarter [7]. Here’s what this means:

• Nominal GDP: Nigeria's nominal GDP was approximately $111.3 billion in early 2023, indicating that the debt is rising relative to the economy’s output [7].

Implications of a High Debt-to-GDP Ratio

• The debt-to-GDP ratio is nearing Nigeria’s self-imposed limit of 40%. This raises alarms regarding the sustainability of the country’s debt and its capacity for further borrowing [6].
• A high debt burden can indicate economic distress, reducing available fiscal space for critical services and investment.

Concerns and Criticism

Rising Criticism of Nigeria's Borrowing Strategy

• Economists and civil organizations have expressed profound concerns over Nigeria’s increasing borrowing levels, escalating borrowing costs, and currency depreciation, all of which compound debt service pressures [5].
• Many critics argue that the government’s aggressive borrowing approach, particularly through foreign loans, puts Nigeria in danger of what they describe as a “bottomless pit” of indebtedness [6].

Transparency and Accountability Issues

• There are significant transparency issues regarding how previous debts have been spent. Critics stress the need for clearer accountability in debt management practices [6].
• The latest budget implementation report only covers up to Q2 2024; this limits public insight into the allocation and utilization of funds [6].

Relation to the GistReel Article

The GistReel article mirrors more of these insights about Nigeria’s debt trajectory and President Tinubu’s loan requests, emphasizing the potential for total debt to surpass ₦180 trillion with the new borrowing plan [8]. It also details the sectors set to benefit from this borrowing strategy while reiterating the growing concerns regarding fiscal sustainability and accountability in debt management [8].

Conclusion

In summary, Nigeria is facing a rapidly growing debt profile, with public debt forecasted to exceed ₦180 trillion shortly. This is largely driven by a significant proposal for fresh borrowing by President Tinubu. Rising debt levels amplify existing concerns about fiscal sustainability, borrowing costs, debt servicing capacity, and transparent usage of borrowed funds. The discussions surrounding these figures present an urgent need for thorough examination and revision of Nigeria’s borrowing habits to prevent unsustainable debt crises.

FAQs

What is Nigeria's current public debt?

As of December 31, 2024, Nigeria’s public debt stood at approximately ₦144.7 trillion (~$94.2 billion).

How much is President Bola Tinubu proposing to borrow?

President Bola Tinubu is seeking ₦34 trillion (about $21.5 billion) in fresh loans to fund various essential sectors.

What are the implications of Nigeria's rising debt-to-GDP ratio?

With a debt-to-GDP ratio nearing 53.8%, concerns are mounting regarding debt sustainability and economic viability moving forward.

Why is transparency in debt management important?

Transparency is crucial to ensure accountable use of funds, build public trust, and prevent the risk of falling into unsustainable debt cycles.

What sectors could benefit from the proposed borrowing?

The proposed loans are aimed at funding critical areas like infrastructure, agriculture, health, education, water supply, security, and employment generation.

By closely monitoring the public debt situation, understanding the implications, and advocating for transparency, stakeholders can contribute to steering Nigeria toward a more sustainable economic future.