Damilola Olufemi and Fatimah Idera
According to the National Bureau of Statistics (NBS), Nigeria’s domestic and external debt rose to ₦149.39 trillion (about $97 billion) in Q1 2025, up from ₦121.7 trillion in 2024, an increase of 22.8% year-on-year. Reuters reports that in Q2 2025, Nigeria’s GDP stood at ₦372.82 trillion ($243.7 billion), placing the country’s debt-to-GDP ratio at 39.8%.
The debt-to-GDP ratio, the percentage of a country’s total public debt compared to its Gross Domestic Product, remains slightly below both the government’s self-imposed 40% ceiling and the 55% benchmark set by the World Bank and the International Monetary Fund (IMF).
While Nigeria’s debt-to-GDP ratio may seem modest compared to some global averages, the real concern lies in the debt-servicing burden, which accounted for 77.1% of total international payments, including overseas remittances and letters of credit.
History of Tinubu’s loan requests and approvals
Less than two months after assuming office (July 2023) as President of the Federal Republic of Nigeria, Bola Ahmed Tinubu requested Senate approval for an $800 million World Bank loan to cushion the impact of ending petrol subsidies, according to Reuters.
In May 2025, Tinubu submitted another request to borrow over $21 billion externally to plug shortfalls in the 2025 budget. In July 2025, he sought approval for an additional $347 million loan earmarked for telecommunications and infrastructure projects.
‘Nigeria’s public debt worrisome’
Last week, the Speaker of the House of Representatives, Hon. Tajudeen Abbas, expressed alarm over Nigeria’s growing debt profile. Abbas warned that the country’s debt-to-GDP ratio had jumped to around 52%, surpassing the generally considered safe threshold of 40%. He urged the President to ensure prudent utilization of borrowed funds, stating:
“Indeed, public debt, when managed prudently, can be a tool for growth and prosperity. Yet, when left unchecked, it becomes a burden that erodes economic stability and threatens the welfare of future generations.”
Economists have also cautioned that the rapid accumulation of loans could push Nigeria into a fiscal corner, undermining investor confidence, depreciating the naira, and driving up import costs.
The African Democratic Congress (ADC) criticised Tinubu’s administration for what it described as reckless borrowing, arguing that the current government has borrowed far more aggressively than previous administrations. The party claimed borrowing under Tinubu has skyrocketed to ₦149.8 trillion per year, compared with ₦4.7 trillion annually under the late President Muhammadu Buhari.
“In just two years, this administration has borrowed more than ten times what Buhari borrowed in the same timeframe,” the party said, warning that the borrowing spree could drive Nigeria’s public debt beyond ₦200 trillion by the end of 2025, without visible economic gains to justify the increase.
Speaking to Dr. Emmanuel Oni, Investment Operations of FNZ UK Ltd, explained the impact of Nigeria’s current debt profile on a 20-year-old Nigerian, noting that all financial steps and activity of the government trends to fall short on citizens.
“One must start from the economic truth that whether a government borrows, prints money, or raises taxes, the burden eventually falls on the citizen in the long run by the principle of Ricardian Equivalence. In Nigeria’s case, the situation is compounded by the opacity of public financial management and the unsustainable structure of debt financing.”
He stated that Nigeria’s current public debt of over ₦149 trillion is not just a figure but reflects deep structural imbalances.
Oni disclosed that public debts are not serviced by GDP figures but a portion of government revenue, which itself is a further lower proportion of the national productivity.
“When 80–90 per cent of our revenue is committed to debt servicing, we are essentially mortgaging our future and pushing the country into more debt and weakening its fiscal position. Politicians often cite GDP figures to downplay concerns, but this overlooks the country’s weak revenue base.”
He noted that if Nigeria fails to service its debts, its rating would fall and would further worsen its debt raising potential, as its costs of borrowing would rise to compensate whichever lender is ready to take the risk.
Oni maintained that the debt has immediate impact and consequences on Nigerians of all, stressing that compulsory nature of Nigeria’s debts servicing obligations means that the country cannot postpone the evil days literally.
“constrained current public expenditures as Nigeria’s current revenues are sacrificed and this already leaves the government with fewer resources to provide basic infrastructure and services including education, healthcare, and social programmes, to cater for the welfare of the people, including the youth population,” Oni said.
Other consequences include indirect impacts of weak currency value, crowding out of private investment, reduced economic opportunities, higher taxes to meet debt servicing and repayment obligations.
Youth unemployment and underemployment are already at crisis levels, he said, adding that without a reset in Nigeria fiscal strategy, the outlook will only get worse.
A call for fiscal discipline
Economists argue that debt itself is not inherently harmful but becomes dangerous without accountability. Oni urged Tinubu’s administration to prioritise transparency, tighten spending controls, and channel borrowing into productivity-enhancing sectors like technology, energy, and infrastructure.
As Nigeria struggles to balance economic reform with public expectations, its growing debt pile is emerging as a central test of Tinubu’s presidency, one with profound implications for Africa’s largest economy and its citizens’ future.
