Despite the essential role debt plays in enabling structural transformation and development, the rate at which Nigeria’s debt is rising has constrained the country’s ability to generate sufficient growth, cope with crises, and invest for development. In 2023, Nigeria’s debt reached $108.3 billion. This represents an increase of 123% since 2012, a rate roughly six times the country’s growth rate of GDP. Nigeria’s increased debt is as a result of an interplay of factors including the COVID-19 pandemic and the Russia-Ukraine war. Most of the new debt has been externally obtained leading to an increase in the risk of the burden of that debt becoming unsustainable. This is because global financial pressures have weakened local currencies and increased interest rates, thus increasing the cost of servicing that debt in real terms. Nigeria’s external debt as a share of total debt has increased from 14% to 40% between 2012 and 2022.
This article was first published by Brookings Institution. READ MORE