Nigeria’s public debt is projected to reach a staggering ₦187.8 trillion by the end of 2025, up sharply from ₦121.67 trillion recorded in December 2024, based on revised estimates from the Debt Management Office (DMO). This alarming surge reflects the convergence of several adverse macroeconomic factors—most notably an aggressive pace of government borrowing, sustained depreciation of the naira, and elevated domestic and global interest rates.

As these pressures mount, concerns over Nigeria’s fiscal sustainability are intensifying. The growing debt burden risks crowding out critical public investment, undermining investor confidence, and straining the government’s ability to manage economic shocks.

In this article, we examine the key drivers behind this upward debt trajectory, explore the implications for macroeconomic stability, and consider what policy responses may be necessary to restore balance and credibility to Nigeria’s public finances.

KEY DRIVERS OF THE DEBT SURGE

Aggressive Borrowing:

The Federal Government continues to lean heavily on both domestic and external sources. Recent moves include:

▪ A $2.25 billion Eurobond issuance in Q1 2025

▪ A $900 million dollar-denominated domestic bond, the first of its kind

▪ Over ₦7 trillion in Ways and Means Advances from the CBN

Naira Depreciation:

The naira has weakened from around ₦900/$ in January 2024 to ₦1,425/$ 1,603as of April 2025, pushing up the local value of external debt and debt servicing obligations.

Rising Borrowing Costs:

Interest rates remain elevated, with the Monetary Policy Rate (MPR) at 24.75%—raising the cost of new borrowings and inflating debt service payments.

IMPLICATIONS

Debt Sustainability Concerns:

Nigeria’s debt-to-GDP ratio has now crossed 58%, breaching the DMO’s 40% threshold and edging close to the IMF’s 60% ceiling for emerging markets.

Fiscal Strain:

₦6.0 trillion spent on debt service in H1 2024

Debt service now consumes over 50% of total FG

Expenditure

Debt service-to-revenue ratio at 162%, signaling critical fiscal stress

WHAT DOES THIS MEAN TO YOU?

Whether you’re an individual investor, entrepreneur, or corporate decision-maker, Nigeria’s rising debt levels affect you more than you might think:

Higher taxes may be used to raise revenue.

Tighter credit conditions and higher interest rates could hurt business expansion or personal borrowing.

Currency pressures could stoke inflation, reducing purchasing power and investment returns.

Investor sentiment may weaken, affecting markets and economic growth.

Bottom line: It’s time to take proactive steps to protect your personal and business finances.

WHAT YOU CAN DO

At DFC Asset Management, we advise clients to:

❖ Diversify income sources and reduce reliance on naira-denominated returns

❖ Invest in inflation-hedged assets, including commodities and selected equities

❖ Review debt exposure, especially if your business relies on loans or imports.

❖ Plan ahead with realistic financial forecasting and risk scenarios

Let’s help you position your portfolio for resilience in uncertain times.

CONCLUSION

Nigeria’s mounting debt is more than just a macroeconomic issue—it has real, personal implications for every household and business. As policymakers seek solutions, you can’t afford to be reactive. Stay informed. Stay prepared. Stay diversified.

Follow DFC Asset Management for timely insights, smart investment strategies, and guidance to navigate Nigeria’s dynamic financial landscape.

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