The sharp fall of the naira has significantly increased Nigeria’s external debt in local currency terms, adding about ₦30 trillion between 2023 and June 2024. This increase highlights the economic impact of currency depreciation on the nation’s finances.
Data from the Debt Management Office (DMO) shows that Nigeria’s external debt was $43.16 billion in June 2023, equivalent to ₦33.25 trillion at the exchange rate of ₦770.30 per dollar. By June 2024, despite a slight decline in dollar debt to $42.90 billion, the naira’s depreciation (now ₦1,470.19 per dollar) pushed the debt to ₦63.07 trillion.
This means Nigeria’s external debt grew by 89% in naira terms within a year, even though it dropped slightly in dollar terms. If the 2023 exchange rate had remained stable, the debt would have been ₦33.05 trillion, avoiding an extra ₦30.02 trillion.
Multilateral organisations are Nigeria’s largest creditors, holding nearly half of its total external debt. Here’s a breakdown:
- World Bank Group: $16.32 billion, mostly owed to the International Development Association (IDA).
- IMF: $1.61 billion.
- African Development Bank (AfDB): $3.87 billion.
- Islamic Development Bank (IsDB): $241.84 million.
Nigeria also owes $4.97 million to the Arab Bank for Economic Development in Africa and $273.51 million to the International Fund for Agricultural Development.
Nigeria’s bilateral creditors, including China, France, and others, account for $5.89 billion of its debt. Notable figures include:
- China: $5.07 billion (the largest bilateral lender).
- France: $623.55 million.
- Japan: $52.18 million.
- India: $22 million.
- Germany: $115.81 million.
Commercial lenders, mainly through Eurobonds, account for $15.12 billion, or 35.24% of Nigeria’s external debt.
President Bola Tinubu has described the reduction of sovereign debt servicing from 97% to 65% of government revenue as a sign of economic recovery. During a recent ceremony for new ministers, Tinubu promised tougher measures to protect Nigeria’s wealth and combat economic challenges.
