Nigeria currently has a sizeable debt portfolio consisting of both domestic and external debts. As of December 2022, Nigeria’s total public debt stood at approximately $100 billion.
The bulk of Nigeria’s debt is external debt, which makes up around 60% of the total debt. The country’s external debt currently stands at over $62 billion, with major creditors including multilateral institutions like the World Bank and African Development Bank, as well as bilateral creditors like China, France, and Japan. The high level of external debt means Nigeria is vulnerable to fluctuations in the global financial markets and economic shocks.
Nigeria’s total domestic debt as of December 2022 was around 27.5tn naira. This consists mainly of Nigerian Treasury bills and bonds held by local banks and investors. The Nigerian government borrows domestically to finance its budget deficit. The domestic debt is denominated in the naira, which means it is somewhat insulated from external shocks.
However, servicing Nigeria’s growing debt has become burdensome. Debt servicing costs now make up over 60% of government revenue, limiting funds available for infrastructure, health, and education. The high debt levels also constrain Nigeria’s ability to borrow more funds to stimulate economic growth.