The Central Bank of Nigeria (CBN) has reported that Nigeria’s external debt reached N66.14 trillion (equivalent to $43.03 billion) in Q3 2024, accounting for 23.14% of the country’s Gross Domestic Product (GDP).
This disclosure came as part of the Fourth Quarter 2024 Economic Report, published on Monday.
Increase in External Debt
The figure represents a 0.30% increase from $42.90 billion recorded in Q2 2024, reflecting a steady upward trend in Nigeria’s borrowing activities.
On a year-on-year (YoY) basis, external debt has risen by 3.40%, up from $41.59 billion in Q3 2023, illustrating the nation’s growing reliance on foreign loans to address fiscal challenges and fund various development projects.
Breakdown of Nigeria’s External Debt Stock
Nigeria’s external debt is sourced from various channels:
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Multilateral Loans: $21.77 billion (50.60%) – sourced from institutions like the World Bank, IMF, and African Development Bank.
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Commercial Loans: $15.12 billion (35.14%) – primarily from Eurobonds.
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Bilateral Loans: $5.81 billion (13.50%).
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Syndicated Loans: $0.33 billion (0.76%) – sourced through the African Finance Corporation.
Debt Servicing and Payment Analysis
By September 2024, Nigeria’s external debt service payments amounted to $1.34 billion, comprising both principal and interest obligations.
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Principal repayments: $0.72 billion (53.73% of total payments).
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Interest payments: $0.62 billion (46.27% of total payments).
Commercial Borrowings represented the largest share of interest payments, totaling $0.44 billion (70.96%), followed by multilateral institutions at $0.12 billion (19.35%), and bilateral loans at the remaining portion.
Implications of Growing Debt
The consistent rise in external debt reflects Nigeria’s increasing dependence on foreign financing to meet fiscal demands and fund development projects. While multilateral loans remain the dominant source, the substantial share of commercial borrowings raises concerns about the long-term sustainability and repayment capacity of the country.
As debt servicing continues to grow, economic stakeholders must find a balance between borrowing strategies and managing rising debt obligations. Experts suggest that boosting oil revenues, improving tax collection, and pursuing strategic debt restructuring could help ease debt pressures and support economic growth.
