Nigeria’s debt servicing costs soared to N8.9 trillion in the first nine months of 2024, far exceeding the pro-rata budget estimate of N6.2 trillion, according to a new report by Afrinvest.
The report highlights that the surge is linked to the country’s escalating debt burden, which grew sharply from N97.3 trillion at the end of 2023 to N144.7 trillion in 2024. Debt servicing during the period accounted for 58.3% of Nigeria’s total revenue, putting enormous strain on public finances.
Afrinvest warned that the country’s rising debt and recurrent spending obligations are crowding out funding for capital projects, which are crucial for driving sustainable economic growth. Despite the 48.7% increase in debt within one year, Nigeria’s real GDP growth remained modest at 3.4%, reflecting growing fiscal pressures.
“The recent spike in Nigeria’s debt levels threatens to disrupt economic progress, particularly as most of the borrowings are channelled towards non-capital expenditures,” the report stated. “Between January and September 2024, Nigeria spent N8.9 trillion servicing its debts, well above the N6.2 trillion pro-rata target.”
The ballooning debt has also contributed to the International Monetary Fund’s downward revision of Nigeria’s growth outlook for the coming years.
Further analysis by Afrinvest pointed to persistent challenges facing Nigeria’s major revenue sources, such as crude oil exports and tax collections, which are likely to remain under pressure through 2025. Analysts cited a combination of external shocks and domestic issues—such as insecurity in farming areas, rampant oil theft, corruption, and poor fiscal management—as key factors exacerbating revenue shortfalls.
“Crude oil production and tax revenues will likely stay subdued due to a combination of global market disruptions and internal governance challenges,” the report added.
As Nigeria navigates a delicate economic environment, experts stress the urgent need for reforms aimed at improving revenue generation, curbing wasteful spending, and redirecting borrowing toward productive sectors to support economic resilience.
