The devaluation of the Naira has led to a significant increase in Nigeria’s external debt in local currency terms, despite a decrease when measured in US dollars. Data from the Debt Management Office indicates that Nigeria’s external debt rose by approximately N30.03tn between 2023 and June 2024 due to the currency devaluation.
By June 2024, Nigeria’s external debt had reached $42.90bn, equivalent to N63.07tn after the Naira depreciated by 47.6% against the dollar. This resulted in an 89.7% increase in Naira terms, amounting to N29.82tn within the same period.
Multilateral lenders, including the IMF, World Bank Group, AfDB Group, and IsDB, account for over half of Nigeria’s external debt. Meanwhile, bilateral creditors like China, France, and other countries have provided credit financing to Nigeria.
Commercial creditors, mainly through Eurobonds, also play a significant role in Nigeria’s external debt, with $15.12bn owed in Eurobonds, representing 35.24% of the total external debt.
The Federal Government plans to secure additional external funding, with the external debt stock expected to rise further. A recent approval of a $2.2bn external borrowing plan aligns with the government’s economic recovery strategy, focusing on stabilizing macroeconomic conditions and supporting local production.
Foreign debt service payments have increased, reflecting the growing pressure on Nigeria’s fiscal balance amid economic challenges. Developing nations, including Nigeria, are facing challenges in servicing their foreign debts, impacting critical sectors such as health and education.
The rise in interest rates globally has exacerbated the situation, with vulnerable economies experiencing significant financial strain.