Nigeria’s debt servicing costs rose to 4.1% of Gross Domestic Product (GDP) in 2024, up from 3.7% in 2023, according to the latest Country Focus Report published by the African Development Bank (AfDB).
The increase reflects growing fiscal pressure on the federal government as it continues to grapple with high debt obligations and limited revenue generation.
Rising Debt and Borrowing
The AfDB report revealed that Nigeria’s total public debt climbed to 52.3% of GDP in 2024, compared to 41.5% in 2023. Within the same period, the government added $3.3 billion in new borrowing, $2.2 billion from Eurobonds and additional multilateral loans to finance budget shortfalls.
Debt-service payments also consumed 77.5% of total federal revenue in 2024, slightly higher than 76.8% in 2023, further limiting fiscal space.
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Impact on Fiscal Sustainability
The report warned that the country’s rising debt service obligations could crowd out investment in critical sectors such as infrastructure, education, and health. While the fiscal deficit narrowed slightly from 4.0% to 3.9% of GDP, the overall outlook remains concerning due to persistent low revenue collection and high recurrent spending.
Nigeria continues to struggle with a tax-to-GDP ratio of just 5.2%, one of the lowest in the world. This hampers the government’s ability to fund its development priorities without relying heavily on borrowing.
Economic Outlook
The AfDB emphasised that Nigeria must accelerate structural reforms to improve domestic revenue mobilisation, reduce over-reliance on debt, and strengthen expenditure efficiency. High interest rates, exchange rate fluctuations, and global monetary tightening have contributed to rising debt-servicing costs.
Experts have noted that unless significant revenue reforms are implemented, the country risks falling into a deeper debt trap, with long-term consequences for economic growth and stability.
