Nigeria Debt Profile

The Nigerian blogger Ibikunle Abraham Laniyan briefly examines the rising rate of Nigeria Debt Profile from pre independence to post independence era still counting and examine their growing momentum and encourage sanity . Enjoy the reading.

Nigeria Debt Profile was begun in 1923 when it first borrowed $5.7million from the British government .Like every government Nigeria government due to finance the federal budget deficits and manage the economy.

However Nigeria domestic debt is funded through its financial system the central bank's ways and means,the deposit money bank and the pension funds and public institutions.In the money domestic debt instruments such Treasury bills, commercial paper,sukuk bond,FGN savings bond.Nevertheless the persistent rise in national debt is certainly terrifying in recent times including high debt servicing rate,borrowing cost and the crowding effect as it were over last 20 years or so.

The debt shot up from 1920s to escalate in mid 1970s due to aggressive borrowings worsened the plight of growing Indebtedness in the 80s ,90s and 2000 still ballooned thereafter.Apparently the quantum rise in national debt profile certainly terrifying growing from 3.2trillion in 2008 due to impact of global financial crisis and financial market in the country to 12.1tr.naira in 2015.Due to COVID 19 pandemic of 2020 it skyrocketed to 32.9 trillion.Further aggravated into 89.4 trillion naira by 2023 and following the 2023 election jumped from 49 trillion naira into 149 tr.naira or almost$100b.The current government took over leadership with the stigma of 90percent of federal revenue to service debt compared to 1991 when it was 75per cent of the federal revenue.

The country faced debt sustainability issues and a significant burden for that rose debt service to revenue ratio from over 80percent in 2022 beyond normal recommendations of 22.5%.Unlike half of federal government expenditures in 2024 consumed by debt service in the first six months.It exceeded Fitch prediction of 2025-2026 prediction of 51%of GDP and 30% of revenue and infact president announced 90 %rate when it took over government and the unsustainability.

In the first eight months of 2025 external debt servicing alone gulped $2.6billion decreased from $3.06 billion in the corresponding period of 2024.

Aggressive naira borrowing devaluation crisis and weak fiscal discipline aggravated the Nigerian debt crisis.There are limited fund for debt services given 80 percent of funds were allocated to debt servicing.Isnt it pathetic for government to keep borrowing its fund from the same financial institutions that kept it at exorbitant interest rates?