The Central Bank of Nigeria (CBN) has disclosed that the country’s external debt reached N66.14 trillion (equivalent to $43.03 billion) in the third quarter of 2024, amounting to 23.14% of Nigeria’s GDP.
This disclosure was part of the Fourth Quarter 2024 Economic Report, published on Monday by the apex bank.
The latest figure represents a 0.30% increase from the $42.90 billion recorded in Q2 2024, highlighting a consistent upward trend in Nigeria’s borrowing activity.
On a year-on-year (YoY) basis, Nigeria’s external debt grew by 3.40%, rising from $41.59 billion reported in Q3 2023. This steady increase reflects the nation’s reliance on foreign loans to address fiscal challenges and fund development projects.
Breakdown of Nigeria’s external debt stock
A detailed analysis of the external debt stock reveals diverse sources of borrowing.
- Multilateral Loans: These include financing from institutions such as the World Bank Group, International Monetary Fund (IMF), and African Development Bank Group, collectively amounting to $21.77 billion, which accounts for 50.60% of the total debt stock.
- Commercial Loans: Primarily from Eurobonds, this segment totaled $15.12 billion (representing 35.14%).
- Bilateral Loans: Nigeria sourced $5.81 billion (13.50%).
- Syndicated Loans: The balance of $0.33 billion (0.76%) originated from syndicated loans through the African Finance Corporation.
Debt servicing and payment analysis
By the end of September 2024, Nigeria’s external debt service payments stood at $1.34 billion, comprising principal and interest obligations.
Principal repayments, which made up 53.73% of debt service payments, amounted to $0.72 billion; While interest payments, amounted to $0.62 billion, with interest constituting 46.27% of the total payments.
A closer look at interest payments shows Commercial Borrowings accounting for the largest share, $0.44 billion (70.96%).
Multilateral Institutions contributed $0.12 billion (19.35%); While Bilateral Loans represented the remaining balance.
What this means
The consistent growth in external debt indicates Nigeria’s increasing reliance on foreign financing, a trend driven by fiscal constraints and development needs.
- While multilateral loans remain the dominant source of funding, the significant share of commercial borrowings raises questions about long-term sustainability and repayment capacity.
- As external debt servicing continues to rise, Nigeria’s economic stakeholders are faced with balancing borrowing strategies against the challenges of managing rising debt obligations.
- The report’s findings highlight the need for fiscal discipline and the prioritization of investments that drive economic growth.
Experts believe that a combination of higher oil revenues, improved tax collection, and strategic debt restructuring could help sustain lower debt service payments in the coming months.