Nigeria spent 4.1 per cent of its Gross Domestic Product (GDP) on debt servicing in 2024, up from 3.7 per cent in 2023, according to the latest Country Focus Report by the African Development Bank (AfDB). The increase reflects growing borrowing costs amid high domestic interest rates and tighter global financial conditions. Public debt surged to 52.3 per cent of GDP, driven by fresh borrowings, including $3.3 billion in new debt raised through Eurobond issuance and multilateral lenders, as the government sought to plug budget deficits.

The report revealed that debt servicing consumed over three-quarters of federal government revenue, with the debt servicing-to-revenue ratio rising to 77.5 per cent in 2024. Despite fiscal reforms such as fuel subsidy removal and exchange rate unification, rising debt obligations continued to constrain public spending. The AfDB warned that this trend, combined with Nigeria’s low tax-to-GDP ratio of 5.2 per cent and a large informal sector, is limiting the government’s ability to invest in critical infrastructure and social services.

Although the economy grew by 3.4 per cent in 2024, the AfDB projects a slight slowdown in the coming years due to global uncertainties and declining oil prices. With government expenditure at just 15.5 per cent of GDP—well below the regional average—the report stressed the urgent need for reforms to expand the tax base, improve revenue collection, and attract private capital. It also called for increased investment in education and healthcare, which continue to be underfunded, receiving only 7.9 and 5.3 per cent of the budget, respectively.