Nigeria’s debt servicing costs rose sharply to N8.9tn in the first nine months of 2024, far exceeding the pro-rata budget of N6.2tn.
A new report by Afrinvest revealed that the surge in debt servicing is linked to the country’s ballooning debt profile, which jumped from N97.3tn at the end of 2023 to N144.7tn by the end of 2024. The amount spent on servicing debt in just nine months represented 58.3 per cent of Nigeria’s total revenue, putting enormous pressure on government finances.
Afrinvest warned that the growing debt servicing burden, alongside heavy recurrent spending, is squeezing funds that should have been channeled into capital projects crucial for boosting economic growth.
Despite the sharp 48.7 per cent rise in debt within one year, Nigeria’s real GDP growth for 2024 was limited to 3.4 per cent — a clear indication that rising debt is weighing heavily on the economy.
“The recent surge in Nigeria’s debt profile has the potential to derail growth momentum, especially if the proceeds are largely deployed to non-CAPEX activities,” Afrinvest stated. “In nine months of 2024, Nigeria spent N8.9tn on debt servicing (budgeted pro-rata: N6.2tn), driven by the surge in debt profile from N97.3tn at the end of 2023 to N144.7tn in 2024.”
The rising debt burden has also contributed to a downgrade in Nigeria’s growth projections by the International Monetary Fund (IMF).
Meanwhile, analysts noted that key revenue sources, including crude oil exports and taxes, are expected to remain under severe pressure throughout 2025.
This pressure is linked to a mix of external challenges — like global market volatility — and domestic issues such as insecurity in farming communities, rampant crude oil theft, widespread corruption, and poor administrative management.
“Key revenue accretion sources, crude oil exports and taxes are likely to remain pressured for the rest of 2025 due to external shocks, and self-inflicted challenges such as insecurity in agrarian communities, unending crude oil theft, corruption, and executive imprudence,” the report added.
As Nigeria grapples with these fiscal challenges, economic experts have called for urgent reforms to strengthen revenue collection, block leakages, and ensure that borrowings are used primarily for productive investments that can spur long-term economic growth.
Related developments show some cautious optimism, as rating agency Fitch recently upgraded the investment ratings of Lagos, Kaduna, and two other Nigerian states, citing improved financial management. However, observers warn that unless similar discipline is adopted at the federal level, Nigeria’s fiscal future could remain fragile.
