Nigeria’s Public Debt Hits ₦144.67 Trillion, Tinubu's Unending Borrowings Signal Troubling Path Ahead

 

Nigeria’s Public Debt Hits ₦144.67 Trillion, Raising Alarms Over Fiscal Health and Sustainability

Nigeria has closed out 2024 with a ballooning public debt burden, as total liabilities climbed to a staggering ₦144.67 trillion ($94.23 billion), marking a dramatic 48.58% year-on-year surge from ₦97.34 trillion ($108.23 billion) recorded at the end of 2023.

The figures, published by the Debt Management Office (DMO), underscore a growing reliance on both external and domestic borrowing amid continued revenue challenges and economic volatility.

Though the rise in debt levels from ₦142.32 trillion ($88.89 billion) at the end of Q3 2024 reflects a more moderate 1.65% increase on a quarterly basis, the bigger picture is cause for concern. Over the course of the year, Nigeria added over ₦47 trillion to its debt stock—an unsettling jump that highlights deeper structural weaknesses.

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External Debt Soars on New Loans and Naira Weakness

Driving much of the debt explosion is Nigeria’s external debt, which nearly doubled, climbing 83.89% from ₦38.22 trillion ($42.50 billion) to ₦70.29 trillion ($45.78 billion). Analysts attribute this spike to a mix of fresh foreign loans contracted during the year and the sharp depreciation of the naira, which inflated the local currency value of dollar-denominated obligations.

Worryingly, this increased exposure to external financing comes at a time when the global financial landscape is becoming increasingly uncertain. The naira’s weakness means Nigeria is now more vulnerable than ever to rising debt servicing costs, particularly in the face of fluctuating global interest rates.

The DMO’s breakdown reveals that the Federal Government holds the lion’s share of this external debt—₦62.92 trillion ($40.98 billion)—with states and the Federal Capital Territory (FCT) responsible for ₦7.37 trillion ($4.80 billion).

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Domestic Borrowing Remains Hefty—But States Are Pulling Back

On the domestic side, debt rose more moderately by 25.77% over the year, from ₦59.12 trillion ($65.73 billion) to ₦74.38 trillion ($48.44 billion). The Federal Government accounted for most of this, with its domestic debt expanding from ₦53.26 trillion to ₦70.41 trillion, reflecting a 32.19% uptick.

This jump is tied to ongoing budget deficits, with domestic borrowing used to plug gaps and support capital projects.

However, in a notable shift, states and the FCT cut back on domestic borrowing significantly—dropping 32.27% from ₦5.86 trillion to ₦3.97 trillion. This signals a more cautious or constrained fiscal posture at subnational levels, possibly due to reduced appetite for risk or tighter lending conditions.

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Debt Composition: A Near-Equal Split with Rising Risks

By year-end, Nigeria’s debt structure was fairly balanced—48.59% external, 51.41% domestic—but the trend suggests increasing lean towards foreign debt, which could spell future vulnerabilities if not strategically managed.

The quarter-on-quarter data shows a similar pattern. Between Q3 and Q4 2024, external debt increased by ₦1.4 trillion, while domestic debt edged up by just 1.29%, from ₦73.43 trillion ($45.87 billion) to ₦74.38 trillion ($48.44 billion).

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What Lies Ahead: Warning Bells and Policy Imperatives

The country’s rising debt profile is already drawing scrutiny from financial analysts and economists who warn that Nigeria may be approaching a tipping point. With its currency under pressure and oil revenues failing to keep pace with spending needs, the country’s debt servicing obligations could become a major fiscal chokehold.

Experts emphasize that borrowing is not inherently bad, especially when used for productive investments, but without a strong revenue base, the sustainability of such debts is questionable. Calls are growing louder for the Federal Government to urgently diversify the economy, ramp up tax efficiency, and plug leakages in public finance.

“We’re walking a thin line,” one economist noted. “You can’t borrow your way out of a structural revenue crisis.”

The sharp growth in external obligations and the depreciation-driven cost escalation highlight a critical need for more responsible debt management, coupled with reforms to enhance domestic productivity and reduce reliance on volatile global financial markets.

Nigeria stands at a fiscal crossroads. Whether it treads a path toward stability or spirals further into a debt trap will depend largely on the policy decisions made in the months ahead.