Nigeria's external debt to rise above $45bn by the end of this year as government keeps borrowing

NIGERIA'S external debt is set to rise to as much as $45.1bn by the end of this year as the federal government is planning to borrow more money to fund its annual budget due to the lack of growth in the economy.

Over recent years, Nigeria has suffered by the effects of sluggish economic growth since the Codid-19 pandemic as a result of a combination reduced crude oil output, limited global prices, high inflation and a failure to attract foreign direct investment (FDI). This has forced the government to resort to borrowing to fund its annual budgets, increasing the country's debt profile.

According to a recent report by Nigeria's Debt Management Office (DMO), the country’s external debt stock increased by $780m in the second quarter of 2024, growing to $42.9bn in June from $42.12bn in March. Last Thursday, Nigeria's Federal Executive Council approved an additional $2.2bn external borrowing plan as part of the federal government’s 2024 Appropriation Act financing programme.

Speaking on the fresh borrowing plan, finance minister Wale Edun, stated that it comprises Eurobond and Sukuk offerings, valued at $1.7bn and $500m respectively. He added that Nigeria’s ability to access the international capital market indicates an acceptance and support for President Bola Tinubu’s economic reforms.

With the additional borrowing plan of $2.2bn, the country’s external debt is projected to reach $45.1bn by the end of 2024. However, the borrowing plans come at a time when Nigeria spent $3.58bn servicing its foreign debt in the first nine months of 2024, representing a 39.77% increase from the $2.56bn spent during the same period in 2023, according to data from the Central Bank of Nigeria.

In October this year, the DMO reported that Nigeria’s total debt stock had risen to N134.3trn ($80.6bn) by the end of June 2024. Muda Yusuf, the director of the Centre for the Promotion of Private Enterprise, criticised the increasing debt burden, citing insufficient revenue capacity and ongoing infrastructural deficits as major concerns.