Nigeria has fully repaid its $3.4 billion COVID-19 loan borrowed from the International Monetary Fund (IMF) under the Rapid Financing Instrument (RFI), exiting the IMF’s list of debtor countries as of April 30, 2025. This loan was disbursed in April 2020 to help Nigeria manage the economic impact of the pandemic and the sharp fall in oil prices.
Nigeria’s Debt Position
IMF COVID-19 Loan: The principal amount of $3.4 billion has been fully repaid by Nigeria, following a five-year repayment plan with a moratorium of about 3.25 years. However, Nigeria will continue to pay annual Special Drawing Rights (SDR) charges related to this loan, estimated at around $30 million per year until these charges, totaling approximately SDR 126 million (about N274 billion), are fully cleared.
Current Debt Stock: Nigeria’s total government debt is projected to reach about N187.79 trillion (approximately $230 billion) in 2025, up from N153.04 trillion in 2024. This includes both domestic and external debts.
External Debt Servicing: Nigeria’s external debt service is expected to rise to $5.2 billion in 2025, including $4.5 billion in amortizations and a $1.1 billion Eurobond repayment due in November 2025. This reflects increasing pressure on public finances despite ongoing reforms.
Foreign Debt Composition: As of mid-2024, Nigeria’s foreign debt stood at around $43 billion (N63 trillion), making up 47% of the total debt stock. The federal government accounts for the majority of this external debt.
Nigeria’s repayment of the $3.4 billion IMF COVID-19 loan marks a significant milestone in its economic recovery, but the country continues to face substantial debt obligations both domestically and externally, with rising debt servicing costs projected for 2025.
Nigeria ranks 6th among African nations
Nigeria ranks sixth among African countries in terms of external debt, with about $32.46 billion in external debt as of early 2025. This places it behind Egypt ($103.75 billion), South Africa ($58.77 billion), Angola ($45.77 billion), and a few others. Nigeria accounts for roughly 8% of Africa’s total external debt, which is concentrated mostly in the top 10 debtor countries holding 69% of the continent’s external debt stock.
In absolute terms, Nigeria’s external debt is significant but lower than the largest African economies like Egypt and South Africa. Nigeria’s total external debt was reported at around $43 billion in September 2024 by some sources, reflecting slight variation in figures depending on reporting.
Nigeria’s debt risk is classified as “moderate” alongside countries like South Africa and Morocco, but it faces rising borrowing costs and fiscal pressures due to interest payments that consume a growing share of government revenue. Africa’s average cost of borrowing rose to 8.2% in 2024, higher than the pre-pandemic range, increasing debt servicing burdens.
Overall, Nigeria’s debt position is substantial within Africa but not the highest. It faces challenges similar to other large African economies: reliance on external borrowing for infrastructure and budget deficits, exposure to currency depreciation, and the need for improved fiscal management to ensure debt sustainability.
In summary:
- Nigeria is 6th in Africa by external debt (~$32-43 billion).
- Accounts for about 8% of Africa’s external debt.
- Debt risk is moderate but rising borrowing costs strain finances.
- Behind Egypt, South Africa, Angola, and a few others in debt size.
- Faces similar debt sustainability challenges as other major African economies.
The main factors driving Nigeria’s high external debt include:
Fiscal Deficits: Persistent government budget deficits have forced Nigeria to borrow externally to finance spending gaps.
Exchange Rate Depreciation: A consistently weakening naira increases the local currency cost of servicing foreign debt, contributing to debt accumulation.
Commodity Price Volatility: Nigeria’s heavy reliance on oil exports means that fluctuations in global oil prices, such as the 2014 crash and COVID-19 pandemic impacts, reduce revenues and foreign exchange earnings, prompting more borrowing.
High Interest Rates and Shorter Loan Terms: Shift from concessional loans to commercial borrowing with higher interest rates and shorter maturities since the 1980s increased debt service burdens and arrears.
Low Domestic Savings and Capital Shortages: Insufficient domestic capital forces Nigeria to rely on external borrowing for development and infrastructure projects.
Inflation and Economic Growth Fluctuations: Inflation and inconsistent economic growth affect debt sustainability and borrowing needs.
Structural Economic Challenges: Overdependence on oil exports (Dutch disease) and limited diversification reduce fiscal space and increase vulnerability to external shocks, leading to more borrowing.
In summary; Nigeria’s high external debt is driven by large fiscal deficits, exchange rate pressures, volatile oil revenues, costly borrowing terms, and structural economic weaknesses that limit domestic financing options.
