Nigeria’s Growing Debt Crisis: How Did We Get Here?

Nigeria’s debt has risen to concerning levels, with projections indicating that the total public debt could hit ₦187.79 trillion by the end of 2025. This alarming increase stems largely from persistent budget deficits, which the government has covered through extensive borrowing to fund infrastructure, support public spending, and maintain basic services.

Several factors have fueled the crisis, including heavy reliance on both domestic and external loans, currency devaluation, and weak financial governance. As of mid-2024, domestic borrowing made up 53% of the total debt, while external debt stood at around ₦63 trillion.

Debt servicing costs have surged. In the past year alone, Nigeria spent $4.66 billion on foreign debt payments, with $1.63 billion going to the IMF. These high repayments have triggered concerns about the sustainability of the debt and its long-term impact on economic development.

In response, the government has launched several fiscal reforms, such as fuel subsidy removal and exchange rate unification, aimed at improving revenue and cutting deficits. The World Bank has backed these reforms with a $2.25 billion loan to help mitigate the effects of inflation and support economic restructuring.

However, while fiscal reforms are important, Nigeria must go beyond borrowing. Corruption and poor governance have contributed to the rising debt, with funds sometimes borrowed for projects that are unnecessary or poorly executed. Mismanagement of resources continues to deepen the crisis and weaken public trust.

To truly reduce debt dependence, the country must invest in critical infrastructure such as power, transport, and manufacturing and boost local production to reduce imports and increase exports. Supporting agriculture is also essential; by increasing the value of agricultural products and expanding agro-processing industries, Nigeria can create jobs, feed its population, and earn more foreign exchange.

A sustainable solution will require fiscal discipline, diversified revenue sources, and a strong commitment to economic self-reliance. Only then can Nigeria move toward lasting stability and growth.