Nigeria is once again grappling with the weight of its rising external debt obligations, after the Central Bank of Nigeria (CBN) disclosed that the country spent $2.86 billion on external debt servicing in just eight months of 2025.
The figure, released through official CBN data, underlines the scale of the country’s repayment commitments and has sparked fresh debate over the sustainability of Nigeria’s borrowing strategy and its implications for development.
According to the CBN, the $2.86 billion accounted for nearly 70 percent of Nigeria’s total foreign exchange outflows during the period. This means that for every dollar Nigeria earned and managed to reserve, a significant portion went directly into servicing international debt obligations.
The payments cover interest and principal repayments on multilateral loans, bilateral facilities, and Eurobonds issued on the global market. Economists warn that this trend is squeezing Nigeria’s capacity to channel foreign reserves toward stabilising the naira, importing critical goods, or investing in infrastructure.
“Once debt servicing starts taking up this much of your external obligations, it crowds out fiscal space. The danger is that you are essentially working for your creditors rather than for your citizens,” said Lagos-based economist, Dr. Tunji Olagunju.
Nigeria’s public debt stock has grown rapidly in the last decade, climbing from about ₦12 trillion in 2015 to over ₦121 trillion as of mid-2025, according to the Debt Management Office (DMO). Of this, more than 40 percent is external debt, denominated in dollars and other foreign currencies.
The government has defended its borrowing, arguing that loans were necessary to fund infrastructure, energy, and social programs. But critics say the returns on such loans are unclear, with little to show in terms of functioning rail projects, stable power supply, or improved healthcare.
For context, debt servicing consumed over 80 percent of Nigeria’s government revenues in 2023, one of the highest ratios in the world, according to the World Bank. By contrast, South Africa spends less than 20 percent of revenues on debt repayments.
What this means for Nigerians is that government revenues that could have gone into social welfare, food security, health, and education are being diverted to foreign creditors. This has real implications in a country where poverty levels are rising, food inflation has surged to 40.9 percent (NBS, August 2025), and unemployment remains high.
The Ministry of Finance insists that Nigeria remains committed to meeting its debt obligations, in order to protect the country’s international credit rating. Officials have also pointed to efforts to increase revenue through tax reforms and the newly launched National Fiscal Consolidation Plan, aimed at reducing budget deficits over the next three years.
“We are not facing a debt crisis. What we have is a revenue challenge. Nigeria’s debt-to-GDP ratio remains manageable compared to many countries,” a senior finance ministry official told reporters in Abuja.
However, experts argue that GDP ratios are misleading in Nigeria’s case, given the country’s low revenue-to-GDP ratio of less than 10 percent, one of the weakest globally.
For many Nigerians, the revelation of a $2.86 billion debt service bill has stoked anger and frustration. On X (formerly Twitter), one user wrote: “How do you spend almost $3 billion paying debt in eight months when hospitals are collapsing and children are starving? Where is the accountability?”
Another user added: “This debt doesn’t translate to better lives for Nigerians. It translates to hardship, inflation, and no jobs.”
Civil society organisations have also urged the government to prioritise transparency, arguing that citizens deserve to know exactly how borrowed funds were used. The Civil Society Legislative Advocacy Centre (CISLAC) called for a public debt audit, saying Nigerians should not be saddled with repayments for loans that did not benefit them.
Economists recommend a mix of short and long-term measures, including:
- Renegotiating loan terms to reduce repayment pressure.
- Diversifying exports beyond crude oil to boost foreign earnings.
- Expanding the tax base to capture sectors currently outside the tax net.
- Cutting wasteful government expenditure and corruption leakages.
Failure to act, analysts warn, could see Nigeria slipping toward a debt distress scenario, where new borrowing is only used to pay old loans, deepening a cycle of dependence.
Nigeria’s debt story is more than numbers. For ordinary citizens, it connects directly to the quality of life. Rising debt service means fewer funds for social spending, stalled infrastructure projects, and a persistent squeeze on public sector wages.
As one market woman in Abuja put it: “They say the country is spending billions on debt, but we don’t see the benefit. What we see are high food prices, bad roads, and no jobs.”
Unless Nigeria finds a way to balance its books without suffocating development, the $2.86 billion spent in just eight months could be a prelude to even deeper fiscal struggles in the years ahead.
