Nigeria’s external debt increased by ₦30 trillion from 2023 to 2024, primarily due to the naira's devaluation. As the currency depreciated, foreign debts became more expensive, despite a slight decline in dollar terms. Multilateral lenders, including the IMF and World Bank, remain Nigeria's largest creditors.
Nigeria's external debt has seen a significant increase of ₦30 trillion between 2023 and June 2024, largely due to the sharp depreciation of the naira. The devaluation, which saw the naira's exchange rate plummet by more than 47%, has led to a sharp rise in foreign debt costs in local currency terms. The country's foreign debt, as of June 2024, stands at approximately ₦63.07 trillion, compared to ₦33.25 trillion in 2023.
While Nigeria’s foreign debt in dollars has decreased slightly by 0.60% to $42.90 billion, the naira's decline has significantly impacted the total debt burden when converted into naira. The external debt now represents a major portion of Nigeria’s total debt, accounting for about 46.96% in June 2024, compared to 38.05% in the previous year.
A large portion of Nigeria's foreign debt is owed to multilateral lenders such as the International Monetary Fund (IMF), the World Bank, and the African Development Bank (AfDB). Of these creditors, the World Bank alone holds $16.32 billion of Nigeria's debt, while China remains Nigeria's largest bilateral creditor with an outstanding loan of $5.07 billion.
Experts attribute the increase in Nigeria's external debt to the naira's rapid depreciation, which has made foreign debt considerably more expensive in local currency terms. The Nigerian government continues to prioritize debt management and efforts to stabilize the national currency as part of its broader economic recovery plan.
Despite this surge, the government has emphasized the importance of managing the country's external obligations and has made strides in reducing the percentage of revenue used for debt servicing. However, analysts suggest that the rising debt levels could continue to strain Nigeria’s financial resources unless more substantial reforms are introduced.
