Rising Debt Stock Signals Continued Reliance On Loans For Infrastructure Funding

Debt Stock Rises Amid Expanding Financing Needs

NIGERIA’S external debt has climbed to $51.9 billion in Q4 2025, reflecting the country’s continued dependence on borrowing to finance infrastructure projects and bridge fiscal gaps, according to data from the Debt Management Office (DMO).

The figure represents an increase of about $3.4 billion (7%) within a quarter, driven largely by new Eurobond issuances and infrastructure-linked syndicated loans. Analysts say the trend is likely to continue as government spending pressures persist.

Federal Government Dominates External Borrowing

A breakdown of the debt profile shows that the Federal Government accounts for $46.2 billion, representing about 89% of total external debt, while states and the Federal Capital Territory (FCT) owe $5.7 billion under sovereign guarantees.

Despite the increase, analysts note that external debt still stands at about 17.3% of GDP, which is considered moderate relative to many emerging markets.

Eurobonds and Project Loans Driving Growth

The most significant growth came from market-based borrowing instruments:

• Eurobonds rose to $18.5 billion, up from $17.3 billion
• Syndicated infrastructure loans jumped to $2.7 billion from just $55 million

Recent external financing includes UK-backed funding of about £746 million for Lagos port rehabilitation, part of efforts to improve trade logistics.

Multilateral Institutions Still Largest Creditors

Despite rising commercial borrowing, concessional loans remain dominant:

• Multilateral and bilateral lenders account for 59% of external debt
• The World Bank Group alone holds about $20.2 billion exposure
• The African Development Bank slightly increased lending to about $3.3 billion

China remains Nigeria’s largest bilateral creditor, with exposure rising to $5.6 billion.

Outlook: Borrowing Likely to Continue

Analysts expect Nigeria to maintain a dual strategy of external and domestic borrowing to finance development needs.

However, concerns persist over rising global interest rates, which could increase repayment costs if Eurobond issuance continues.

Experts argue that sustaining debt expansion will depend on stronger revenue generation and improved fiscal discipline.