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The Muhammadu Buhari administration is set to leave behind a staggering N77 trillion public debt for the incoming government of Bola Ahmed Tinubu. Assistant Editor Nduka Chiejina reports on what is owed and how the new administration can deal with the problem.
As of December 2022, Nigeria’s national debt was estimated to be around N46.25 trillion according to data from the Debt Management Office (DMO). This includes domestic and external debt, with the latter accounting for about 40.44% of the total.

It’s worth noting that Nigeria’s debt stock has been growing over the years, primarily due to the country’s efforts to finance its budget deficits and fund infrastructure projects. The experiences of two recessions and the COVID-19 pandemic and its impact on the economy have also contributed to the increase in the debt profile.

However, the government has taken steps to manage its debt, by implementing measures to improve revenue generation and debt servicing. It has also launched several initiatives aimed at boosting economic growth and reducing the country’s dependence on debt.

What does Nigeria owe?

World Bank: The country is indebted to the World Bank to the tune of N6.42 trillion. The debt rose from $6.29billion (N2.9trillion) in December 2015 to $13.93billion (N6.42trillion) in December 2022.

Responding to this the DMO said “it is actually a positive development for Nigeria in the sense that International Development Association (IDA) loans are concessional, that is, they attract low charges and are for very long tenors in some cases, exceeding 30 years. These are the types of loans required to fund development in countries such as Nigeria.”


The DMO added that “by accessing IDA funding, the government is actively reducing debt service costs, since non-concessional funding are usually more expensive and for shorter tenors. Indeed, it will be inefficient for Nigeria to borrow from commercial sources when concessional funding sources such as IDA is available”.

Domestic debt: This essentially is what is owed to contractors in locally by federal and state governments. It stands as at a staggering N 22,210,364,595,850.00. It is made up of FGN Bonds N16,421,564,060,592.00; Nigerian Treasury Bills N4,422,716,799,000.00; Nigerian Treasury Bonds N50,988,000,000.00; FGN Savings Bond N27,505,043,000.00; FGN Sukuk N742,557,000,000.00; Green Bond N15,000,000,000.00 and Promissory Notes N530,033,693,258.00.


External debt: This stands at $41.694 billion and also captures the over N6 trillion owed the World Bank, other multilateral agencies like the African Development Bank (AfDB) and the Islamic Development Bank; bilateral loans, the ones owe to sovereign entities like China (Exim Bank of China), France (Agence Francaise Development), Japan (Japan International Cooperation Agency), India (Exim Bank of India) and Germany (Kreditanstalt Fur Wiederaufbua).

There are commercial debts (the expensive ones) like Eurobonds $15.618 billion. There are also syndicated loans of $260 million. Another $800 million has been programmed to be sourced from the World Bank


Ways and Means: Then there is the scary N23 trillion owed the Central Bank of Nigeria (CBN) as overdraft to the government.

To many analysts, the size of the country’s debt is really not the issue, the headache for this government and the one coming in by the end of this month, is the ability to repay these loans.

Already attempts are being made by the government to service the debts with 96 percent of what the country earns as revenue. The World Bank (a creditor) and some government officials like the Director General of the Budget Office of the Federation, Ben Akabueze, have raised the alarm over the unhealthy amount spent on debt servicing.

“You may have heard that we have one of the lowest Gross Domestic Products-to-debt ratios in the world. While the size of the FG budget for 2023 created some excitement, the aggregate budget of all the governments in the country amounted to about N30trillion. That is less than 15 percent in terms of ratio to GDP,” he said.


“Even on the African continent, the ratio of spending is about 20 percent. At 15 percent, that is too small for our needs. That is why there is fierce competition for the limited resources.

“That can determine how much we can relatively borrow. We now have very limited borrowing space; not because our debt to GDP is high, but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio. Once a country’s debt service ratio exceeds 30 percent, that country is in trouble and we are pushing towards 100 percent, and that tells you how much trouble we are in.


Aside from servicing its debts, the Federal Government has written to the National Assembly to authorise it to securitise the N22 trillion overdraft from the CBN. This has generated a lot of debate among experts.

The terms for securitising the N22 trillion overdraft include 40 years tenor; three years moratorium on principal; interest rate of nine percent per annum; to be amortized over thirty-seven (37) years.

Lennox Mall

The securities will be issued to the CBN by the Federal Government of Nigeria (FGN) but they will not be issued to the public by the FGN to raise funds.



Professor Uche Uwaleke of Nasarawa State University speaking on the country’s rising public debt, said the reality is that the country will have to deal with the precarious situation for several years to come due largely to Nigeria’s low revenue generating capacity – a situation made worse by the fuel subsidy regime and widening budget deficits.

He said: “This is not just about the over N46 trillion reported by the DMO but also the more than N20 trillion owed the CBN in respect of which the government plans to convert to a long-term bond spanning 40 years.


“This grim fiscal position is not lost on the international community and has recently been reflected in the downgrade of the country’s credit rating by global Rating Agencies such as Moodys and Fitch.

“A worrisome aspect is that some of these loans are not applied to capital projects. Else, how does one explain a provision of N8.8 trillion new borrowings in the 2023 budget proposal whereas capital budget is about N5.3 trillion even below cost of debt service at N6.3 trillion.

Uwaleke noted that “the Minister of Finance, whose job it is to source cheap funds to finance budget deficits, has demonstrated professionalism in the discharge of her functions against the backdrop of unforeseen circumstances such as the COVID-19 pandemic.

“To be fair, a number of factors contributing to rising public debt burden such as fuel subsidy and low oil revenue on account of crude oil theft, are not within her control.


It’s pertinent to note that the Strategic Revenue Growth Initiative which the Finance Minister introduced has helped to boost the government’s non-oil revenue.

He advised the next administration to “make efforts to reduce budget deficits including through plugging leakages. Future borrowings should be tied to visible self-liquidating projects. In this regard, a major instrument for raising domestic debt should be Infrastructure bonds such as Sukuk as opposed to the current practice of focusing on FGN bonds”.

For his part, Mr. Gbolade Idakolo, Managing Director/CEO SD&D Capital Management Limited said Nigeria’s increasing debt is a major cause of concern when looking at the percentage increase since 2015, coupled with debt to revenue ratio which is not sustainable.

“The borrowing to fund infrastructure projects would have benefited the country if most projects executed with the funds could repay itself.

“There are no toll charges on major road projects executed with borrowed funds and even the rail projects executed have not generated commensurate returns due to insecurity. The continued borrowing by Nigeria is presently not sustainable because almost 100 percent of our revenues goes for debt servicing.

“The sustainability of our debt largely depends on increasing revenue generated by the government and limiting budget financing through debts.

“The current Minister of Finance has not shown clear understanding of fiscal policies and control to the extent that she lacks control over agencies like the Central Bank of Nigeria under her purview.

“She has also not properly advised the Federal Government on policy issues that could have reduced our dependence on debt to finance our budget and other ingenious measures to attract investors and increase government revenue. She also did nothing to escalate the waste in MDAs and the government is presently viewed as lacking financial expertise in running our fragile economy.

The Director General of the DMO, Ms. Patience Oniha, has very little to say. Her solution out of the debt quagmire is for the government (old and new) to increase revenue to meet pressing budgetary demands in the face of demanding debt servicing.

Source: The Nation

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