Nigeria’s public debt rose from ₦97.34 trillion at the end of 2023 to about ₦159.4 trillion by the close of 2025, an increase of more than ₦62 trillion that has sparked investor concern and political debate.While
While the headline figure appears alarming, a closer examination shows the increase was driven by a combination of exchange-rate depreciation, debt reclassification, and new borrowing.
Fiscal policy adviser Taiwo Oyedele has argued that the sharp rise was largely the result of currency movements rather than an extraordinary increase in government spending. Available data broadly supports that assessment, although new borrowing also contributed to the overall debt stock.
The largest driver was the revaluation of Nigeria’s external debt following the naira’s depreciation. External debt increased from $42.5 billion in December 2023 to about $51.9 billion by December 2025, an increase of roughly $9 billion. However, as the naira weakened from around ₦900 per dollar at the end of 2023 to more than ₦1,500 per dollar in 2025, the naira value of external debt jumped from about ₦38.2 trillion to more than ₦74 trillion. Most of this increase reflected exchange-rate movements rather than a comparable rise in foreign borrowing.
Another contributor was the formal recognition of Ways and Means advances previously extended by the Central Bank of Nigeria to the federal government. The National Assembly approved the securitisation of approximately ₦22.7 trillion in these overdrafts, converting them into long-term government securities. This process largely reclassified existing liabilities into the official public debt stock rather than creating entirely new obligations.
New borrowing nevertheless remained an important factor. Domestic debt rose from ₦59.1 trillion at the end of 2023 to about ₦84.9 trillion by December 2025 as the government continued to finance budget deficits and refinance maturing debt through the domestic bond and Treasury bill markets.
Although much of the increase in the debt stock reflects accounting and structural factors, the fiscal burden has become significantly heavier. The depreciation of the naira has raised the local currency cost of servicing external debt, while new domestic borrowing has increasingly been issued at yields exceeding 20%, pushing up future interest costs.
According to the Budget Office of the Federation, debt servicing consumed about 69% of the federal government’s total revenue in 2024. Other measures paint an even tighter picture: the Central Bank of Nigeria reported that debt servicing absorbed 147% of retained revenue during the first nine months of 2024, while the African Development Bank estimated the debt-service-to-federal-government-revenue ratio at 77.5% for the year.
For investors, the key distinction is that Nigeria’s debt did not expand primarily because of a spending spree. However, the same currency depreciation that inflated the naira value of external debt has also made servicing that debt substantially more expensive. As Nigeria seeks to strengthen public finances, markets are likely to focus less on the size of the debt stock and more on the government’s ability to generate sufficient revenue to meet its growing debt-service obligations.
