Nigeria’s public debt has reached its highest level on record, hitting N144.6 trillion by the end of 2024, according to data released by the Debt Management Office (DMO). This represents a 48.58% increase from N97.3 trillion in 2023, as Africa’s most populous country continues to depend on borrowings to bridge its fiscal deficit.
Despite the sharp rise in naira terms, the total debt in US dollar terms dropped from $108.2 billion in 2023 to $94.2 billion in 2024, suggesting reduced foreign exchange volatility—a rare silver lining in the government’s debt narrative.
The latest data reveals that both external and domestic debts saw significant growth in 2024. External debt rose by 83.89%, from N38.2 trillion (or $42.50 billion) in 2023 to N70.29 trillion ($45.78 billion). Domestic debt also saw a 25.7% increase from N59.1 trillion to N74.38 trillion, though in dollar terms, it fell to $48.4 billion due to currency adjustments.
Of the total debt:
- External debt: 48.59% (N70.29 trillion)
- Federal Government: N62.92 trillion ($40.98 billion)
- States & FCT: N7.37 trillion ($4.80 billion)
- Domestic debt: 51.41% (N74.38 trillion)
- Federal Government: N70.4 trillion
- States: N3.9 trillion
The rise in public debt is largely tied to the government’s approach to deficit financing. In November 2024, the Federal Government sought $2.2 billion in external loans to finance a N9.7 trillion deficit in the 2024 budget, which lawmakers later approved. This strategy continues a long-standing trend of leveraging borrowings to stimulate economic growth.
According to analysts at Renaissance Capital Africa, “Nigeria’s debt position continues to expand as a policy of borrowing to spark growth is pursued.” However, they also warn that while this might offer short-term relief, the country risks walking into a full-blown debt crisis if reforms are not swiftly implemented.
Rising debt levels mean increased costs in servicing these obligations. With exchange rate volatility still a factor—despite some improvements from recent Central Bank policies—the local currency cost of external loans continues to rise, exacerbating the nation’s fiscal strain.
What Can Be Done?
Analysts believe that the key to reducing Nigeria’s debt burden lies in boosting revenue and cutting recurrent expenditure. Upcoming tax reforms are expected to enhance government earnings and reduce the need for new borrowings.
“Higher revenues and lower recurrent spending remain the solutions to Nigeria’s debt sustainability issues,” Renaissance Capital Africa said. “This will allow for less new issuance and the early prepayment of highly priced loans.”
As Nigeria grapples with its worst cost-of-living crisis in a generation, the growing debt profile signals a clear warning: unless bold revenue strategies are implemented and spending becomes more efficient, debt sustainability will remain an escalating challenge for Africa’s largest economy.
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