As of the second quarter of 2024, Nigeria’s public debt has reached an unprecedented level of N134.3 trillion, according to the latest government data. This marks a significant increase from the N121.7 trillion recorded in the first quarter of the same year, reflecting a sharp rise within a few months.
The primary factor contributing to this surge in debt is the ongoing devaluation of the naira, Nigeria’s national currency.
A report from the Ministry of Finance explains that while the dollar value of the country’s debt has remained fairly stable, the weakening of the naira has made the debt appear much larger in local currency terms.
The report stated, “In Q2 2024, the debt stock grew in naira terms to N134.3 trillion ($91.3 billion) from N121.7 trillion ($91.5 billion) in Q1 2024, driven mainly by exchange rate devaluation. The dollar amount of debt was roughly the same.”
The devaluation of the naira has had a significant impact on both the economy and the country’s ability to manage its debt. Since much of the debt is denominated in foreign currency, fluctuations in the exchange rate put further pressure on the nation’s finances.
Nigeria’s debt is split between domestic and external borrowing. According to the report, about 53% of the total debt, or N71.2 trillion, is owed to local creditors, including Nigerian banks, investors, and financial institutions. The remaining 47%, amounting to N63.1 trillion, represents external debt owed to foreign countries, international banks, and global financial organizations.
Another troubling detail from the report is the country’s rising debt-to-GDP ratio, which compares the nation’s total debt to the size of its economy. The debt-to-GDP ratio has now surpassed 50%, signaling that Nigeria’s debt burden is growing faster than its economic output, raising concerns about long-term sustainability.
