SIR: It is worrisome that President Bola Tinubu is taking more loans despite the fact that Nigeria is having problem with increasing high cost of debt servicing. Debt servicing is taking more than 27 per cent of Nigeria’s 2025 budget.
Nigeria’s debt is about $100 billion with $45.9 billion external debt and $51.2 billion domestic debt. The budget for debt servicing is more than the budget of Education, Health and Defence put together in 2025 budget. President Tinubu is paying more attention to obtain more loans and pay less attention to economic consequences of the high cost of debt servicing in Nigeria.
Since assuming office in May 2023, 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.
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 N149.39 trillion, a sharp increase from N121.7 trillion in the same period of 2024.
The Debt Management Office (DMO) reported that domestic debt comprised N78.76 trillion (52.7 per cent) of this total, while external debt was N70.63 trillion (47.3 per cent). This places the country’s debt-to-GDP ratio at 52 per cent, a level that exceeds the legal threshold of 40 per cent. According to a forecast by BudgIT, total public debt could reach N187.79 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. President Tinubu stated in November 2024 that the ratio dropped to 65 per cent from about 97 per cent when he took office in May 2023, though the AfDB reported it rose to 77.5 per cent in 2024.
The World Bank recommends a ratio not exceeding 22.5 per cent, 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 per cent as a sustainable level.
Nigeria’s Debt Servicing Ratio reached critical levels, sometimes exceeding 97 per cent (meaning nearly all revenue went to debt servicing).
Presidential claims (Nov 2024): President Tinubu reported a significant reduction to 65 per cent in late 2024, from approximately 97 per cent when his administration began.
AfDB findings (July 2025): A recent report indicates the ratio increased to 77.5 per cent in 2024. 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 wrote via [email protected]
