It is worrisome that President Tinubu is taking more loans despite the fact that Nigeria is having problems with the increasingly high cost of debt servicing. Debt servicing is taking more than 27 percent of Nigeria’s 2025 budget. Nigeria’s debt is about $100 billion, with $45.9 billion in external debt and $51.2 billion in domestic debt.
The budget for debt servicing is more than the budget of education, health and defence put together in the 2025 budget. President Tinubu is paying more attention to obtaining more loans and less attention to the economic consequences of the high cost of debt servicing in Nigeria.
Since assuming office in May 2023, President Bola Ahmed Tinubu has presided over what is becoming one of Nigeria’s most aggressive borrowing campaigns in recent history. In just two years, Nigeria has secured $29.2 billion in loans, a massive financial commitment that will shape the nation’s economic trajectory for decades. While many Nigerians seem focused on day-to-day survival, the mounting debt quietly grows in the background, accruing interest and setting the stage for future repayment by citizens, including those yet unborn. Tinubu’s $29.2 Billion Debt Train: Who’s Driving, and Who’s Paying?
Nigeria’s increasing loans and high cost of debt-servicing obligations pose a significant risk to the country’s economic stability and development. Public debt has surged rapidly in favour of unproductive rather than productive capital projects. This cycle has been exacerbated by the devaluation of the naira and persistent fiscal deficits. As of the first quarter of 2025, Nigeria’s public debt stood at ₦149.39 trillion, a sharp increase from ₦121.7 trillion in the same period of 2024. The Debt Management Office (DMO) reported that domestic debt comprised ₦78.76 trillion (52.7%) of this total, while external debt was ₦70.63 trillion (47.3%). This places the country’s debt-to-GDP ratio at 52 percent, a level that exceeds the legal threshold of 40 percent. According to a forecast by BudgIT, total public debt could reach ₦187.79 trillion by the end of 2025.
Nigeria’s debt service to revenue ratio (DS/RR) has been a significant concern, but recent reform efforts have shown improvement, though it remains high by international standards.
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President Tinubu stated in November 2024 that the ratio dropped to 65 percent from about 97 percent when he took office in May 2023, though the AfDB reported it rose to 77.5 percent in 2024. The World Bank recommends a ratio not exceeding 22.5 percent, highlighting Nigeria’s challenges in managing its debt service obligations relative to its revenue. World Bank benchmark: The World Bank suggests a ratio below 22.5 percent as a sustainable level. Nigeria’s debt servicing ratio reached critical levels, sometimes exceeding 97 percent (meaning nearly all revenue went to debt servicing).
Presidential claims (Nov 2024):
President Tinubu reported a significant reduction to 65 percent in late 2024, from approximately 97 percent when his administration began.
AfDB Findings (July 2025):
A recent report indicates the ratio increased to 77.5 percent in 2024.
Impact of reforms:
The government’s removal of fuel subsidies and unification of the exchange rate have helped increase revenue, but the gains have not yet matched the scale of spending needs.
Nigeria’s 2025 national budget includes a significant allocation for debt servicing, with figures ranging from ₦13 trillion to ₦16.3 trillion, representing a substantial increase from previous years. This allocation, which some reports state is 25 percent of the budget, has raised concerns among economic analysts due to its large size relative to other sectors and potential impact on the nation’s debt-to-GDP ratio. While the government is exploring ways to reduce its debt burden and improve revenue, challenges remain in achieving macroeconomic stability and fiscal sustainability.
Proposed Budget Size: Reports vary, but the budget is around ₦55 trillion.
Debt Servicing Allocation: Ranging from ₦13 trillion to ₦16.3 trillion, depending on the report and specific framework used.
Budget Deficit: The proposed budget includes a deficit of approximately ₦13.39 trillion.
One of the promises made by Nigeria’s President Bola Tinubu on assumption of office was that his administration would cut down on the over-reliance on borrowing for public expenditure. In fact, Tinubu said he was going to curtail the government’s borrowing so as to reduce the debt service burden on the country. Besides, Tinubu told Nigerians that his “fuel subsidy is gone” pronouncement on May 29 would lead to significant savings and resource reallocation for the country. “We shall instead re-channel the funds into better investment in public infrastructure, education, healthcare and jobs that will materially improve the lives of millions,” he had said.
But many Nigerians were taken aback when the president sought the approval of the National Assembly for his government to access fresh external loans of $7.8 billion and €100 million as contained in the 2022–2024 borrowing plan of the federal government, despite having full knowledge of the country’s debt challenge.
Nigeria’s debt is worrisome because the public debt stock reached 149.39 trillion naira (approximately US$97 billion) by Q1 2025, a significant increase from the previous year. This brought the debt-to-GDP ratio to 52 percent, exceeding the 40 percent legal limit and raising concerns about the country’s fiscal sustainability and its ability to service its debt. Experts and lawmakers are alarmed by the rapid debt growth and the low returns on borrowed funds, which may require urgent parliamentary attention, transparent practices, and fiscal reforms to avoid potential economic catastrophe.
Inwalomhe Donald writes via inwalomhe.donald@yahoo.com.
