Economy

Nigeria’s External Debt Rises to $40bn Under Buhari

Published

4 years ago

October 25, 2022

Eric

Nigeria’s total external debt has risen from $10.32bn on June 30, 2015, to $40.06bn as at June 30, 2022, according to The Punch.

This shows that there has been an increase of 288.18 per cent in seven years, according to the external debt stock reports by the Debt Management Office.

A breakdown shows that in 2015, 36 states had $3.27bn external debt while the Federal Government had $7.05bn.

By 2022, states’ external debt rose to $4.56bn, while the Federal Government’s external debt increased to $35.5bn.

The debts included loans from multilateral sources such as the World Bank, the African Development Bank and the International Monetary Fund.

They also included bilateral loans from China, France, Japan, Germany and India, as well as commercial sources including Eurobonds and Diaspora bonds.

Nigeria’s external debt ballooned as the naira lost value, increasing Nigeria’s debt service burden and worsening its ability to service debt. The International Monetary Fund recently said that the long-term rate of the depreciation of the naira equated to a loss of 10.6 per cent of its value annually since 1973.

According to the IMF, this rate was 1.5 times higher than the long-term rate of the currencies of other emerging markets and developing economies at 7.2 per cent and sub-Saharan Africa at seven per cent over the same time period.

The IMF said, “Its exchange rate underwent more persistent depreciation. Nigeria’s long-term rate of currency depreciation (on average 10.6 per cent annually since 1973) was 1.5 times higher than both EMDE (7.2 per cent) and SSA (seven per cent). Given limited availability of long-term data, it is difficult to estimate the exact reasons.”

The Bank of America recently said Nigeria’s local currency unit was set to weaken further next year as its current exchange rate to the dollar was well above fair value.

According to a report by Bloomberg, the bank said, “Three indicators, the widely-used black-market rate, the central bank’s real effective exchange rate, and our own currency fair value analysis shows the naira is 20 per cent overvalued.

“We see scope for it to weaken by an equivalent amount over the next six-nine months, taking it to as high as 520 per USD.”

During a workshop on tax expenditure organised by the ECOWAS Commission in Abuja, financial experts advised that Nigeria and other West African Countries should move away from reliance on foreign assistance to the financing of developmental projects in the region.

According to them, over-dependence on financial aid and external loans might affect long-term prosperity of the entire region.

The Special Advisor to the Director (Custom Union and Taxation in ECOWAS), Gbenga Falana, while emphasising that the debt profile of most of the countries in the sub-region was mounting, stressed the need for West African countries to look inwardly and finance local projects through effective domestic resource mobilisation.

Reacting, the Managing Director/Chief Executive Officer of Cowry Asset Management Limited, Mr Johnson Chukwu, said that high external debt would impose a huge debt service on the economy.

He said, “This will impose a huge debt service on the economy, particularly at a period when we have low revenue from oil sales. If the revenue from oil sales does not improve, then the government will be struggling to meet that debt service obligation to foreign lenders.”

However, he noted that Nigeria could service its foreign debt at the current level, but a constant increase in debt without a corresponding increase in foreign currency earnings could put the country in a difficult position.

The Punch

Economy

World Bank Okays $1.25bn Loan for Nigeria, Unveils 6-Year Growth Strategy

Published

3 weeks ago

July 1, 2026

Eric

The World Bank has approved a $1.25 billion Development Policy Financing (DPF) loan for Nigeria as part of a new six-year partnership framework to accelerate private sector-led growth, create jobs, and support key economic reforms.

The approval, announced on Wednesday, falls under the Nigeria Actions for Investment and Jobs Acceleration (NAIJA) programme and is part of the World Bank’s Country Partnership Framework (CPF) for Nigeria, covering 2026 to 2032.

According to the bank, the financing will support reforms to improve competitiveness, deepen capital markets, modernise regulations for the digital economy, strengthen power sector reforms, expand agricultural productivity and enhance domestic revenue mobilisation. The programme also seeks to reduce trade barriers in line with Nigeria’s commitments under ECOWAS and the African Continental Free Trade Area.

The approval follows public debate over Nigeria’s rising debt profile, with some Nigerians questioning the country’s continued reliance on external borrowing and calling for greater transparency in the use of previous World Bank loans.

Beyond the financing, the World Bank said the new partnership framework aims to expand electricity access to 32 million Nigerians, provide broadband connectivity to 58 million people, improve health and nutrition services for 40 million citizens and support 9.5 million farmers through higher agricultural productivity.

World Bank Country Director for Nigeria, Mathew Verghis, said recent macroeconomic reforms had helped stabilise the economy but stressed that sustained improvements in living standards would depend on addressing structural constraints to private investment and job creation.

The World Bank Group added that its private sector arms, the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), will support the strategy by mobilising private capital, expanding infrastructure investment and providing guarantees to reduce investment risks.

The new framework reflects the World Bank’s continued focus on supporting Nigeria’s economic reforms while encouraging greater private sector participation to drive long-term growth and reduce poverty.

Economy

Dangote Refinery Files Lawsuit Against FG, NNPC, Marketers over Petrol Import Licences

Published

2 months ago

May 18, 2026

Eric

Dangote Petroleum Refinery has filed a fresh lawsuit against the Nigerian National Petroleum Company Limited (NNPC) and several fuel marketers, seeking to overturn fuel import licences issued by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

According to court documents filed at the Federal High Court in Lagos and cited by Reuters, the refinery is asking the court to nullify import permits recently granted or renewed by the regulator, arguing that the approvals violate an earlier directive ordering all parties to maintain the status quo pending the determination of the case.

The legal action comes at a time when Nigeria is recording a sharp decline in petrol imports due to rising domestic refining capacity, largely driven by output from the Dangote Refinery.

In its filing, Dangote Refinery argued that Nigerian law permits fuel importation only when local production is unable to meet national demand. The company maintained that continued issuance of import licences undermines its operations as it ramps up production from its multi-billion-dollar refinery located on the outskirts of Lagos.

Fuel marketers, however, have consistently defended importation, insisting that imports remain necessary to guarantee a stable supply and prevent shortages across the country.

This is not the first dispute between Dangote Refinery and fuel importers. In 2025, the company filed a similar suit against NNPC Ltd and several marketers, including AYM Shafa Ltd, A.A. Rano Ltd, T. Time Petroleum Ltd, 2015 Petroleum Ltd and Matrix Petroleum Services Ltd, while also seeking ₦100 billion in damages. The suit was later withdrawn without explanation.

Recent industry data showed petrol imports dropped to 965.52 million litres in Q1 2026 from 2.43 billion litres in the same period of 2025. Meanwhile, supply from local refineries rose to 3.18 billion litres, accounting for about 76.7 percent of Nigeria’s petrol supply during the quarter.

Economy

World Bank Flags ‘Hidden Spending System’ Diverting N34.53trn of Nigeria’s Revenue

Published

3 months ago

April 19, 2026

Eric

The World Bank has raised concerns over Nigeria’s fiscal framework, revealing that more than N34.53 trillion was diverted from federation revenue over the past three years through pre-distribution deductions.

In its latest Nigeria Development Update obtained from its website, the global lender disclosed that although total federation revenue rose sharply to about N84 trillion between 2023 and 2025, about 41 per cent of the earnings did not reach the Federation Account for distribution to the federal, state and local governments.

According to the report, gross revenue increased from N17.08 trillion in 2023 to an estimated N37.44 trillion in 2025. However, deductions classified as “first-line charges” also rose significantly, from N6.22 trillion to nearly N15 trillion within the same period, reducing the pool of funds available for distribution.

The World Bank noted that the development has created a paradox in which rising revenues have not translated into improved public spending capacity, as a substantial portion is automatically retained by certain agencies before allocation.

It explained that reforms such as the removal of petrol subsidy and foreign exchange adjustments boosted nominal revenues, but much of the gains were offset by the structure of deductions tied to cost of collection and statutory transfers.

Agencies such as the Nigeria Customs Service, Nigerian National Petroleum Company Limited, and the Federal Inland Revenue Service account for a significant portion of these deductions. The report stated that their funding is based on fixed percentages of gross revenue, leading to higher allocations as revenues increase.

Describing the model as “pro-cyclical”, the Bretton Woods institution said it operates outside the conventional budgetary framework and weakens legislative oversight. In some cases, allocations to individual agencies exceed the revenues of several states and even the budgets of key federal ministries.

The report also highlighted the impact on public finances, noting a decline in capital expenditure from N5.5 trillion in 2024 to N4.5 trillion in 2025, with only about 25 per cent of the approved capital budget implemented. Meanwhile, the federal fiscal deficit remained elevated at N16.9 trillion, driven by debt servicing and recurrent expenditure.

The World Bank warned that the current arrangement undermines fiscal transparency and accountability, as significant portions of public revenue are spent outside the standard appropriation process.

Source: tribuneonline