Nigeria's debt-to-GDP ratio remains within moderate global benchmarks, yet the country faces severe fiscal pressure due to the rising cost of servicing its debt. Recent data from the Debt Management Office and the Central Bank of Nigeria reveal that between 70 and 90 percent of government revenue is now used for debt servicing. This leaves minimal funds available for capital projects or essential public services like healthcare and education. In some cases, new borrowing is required just to meet existing debt obligations, raising concerns about long-term fiscal sustainability. The core issue is not the total size of the debt but the structure and cost of repayment relative to revenue. Nigeria's tax-to-GDP ratio is among the lowest globally, meaning the government has a weak income base to meet growing financial obligations. While international assessments rely heavily on debt-to-GDP metrics, the more revealing indicator—debt service-to-revenue—shows a country under acute financial strain. High borrowing costs, especially in domestic markets, push up interest rates and limit credit access for businesses. Short- and medium-term debt instruments further expose Nigeria to refinancing risks, particularly during global monetary tightening.
The real problem isn't how much Nigeria owes, but how little it collects. With 90 percent of revenue going to debt servicing, the government has little left to invest in growth—or even keep basic services running. This fiscal squeeze, driven by a narrow tax base and expensive borrowing, means every naira spent on interest is a naira stolen from infrastructure, jobs, and public trust. Until revenue generation is treated as urgently as debt management, Nigeria will keep cycling through the same crisis.
