Debt servicing has emerged as a significant component of Nigeria’s foreign payment obligations in 2024, accounting for a staggering 63.56% of the total $5.63 billion in foreign payments in nine months.
This is according to an analysis of the latest international payment statistics data of the Central Bank of Nigeria (CBN).
This percentage marks a sharp increase compared to the same period of 2023 when debt servicing constituted 46.71% of $5.48 billion in total foreign payments.
The rise in debt servicing costs reflects the increasing burden of Nigeria’s external debt obligations amid persistent fiscal challenges.
The country’s total debt service payments surged by 39.77% from $2.56 billion between January and September 2023 to $3.58 billion in the same period of 2024, highlighting the growing financial strain on public resources.
In June, debt servicing costs declined by 6.51% from $54.36 million in 2023 to $50.82 million in 2024. Despite this drop, total foreign payments also fell to $353.61 million, with debt servicing taking up a relatively smaller share of 14.37%.
In September, debt servicing increased by 17.48%, rising from $439.06 million in 2023 to $515.81 million in 2024. Total foreign payments for the month were $798.26 million, with debt servicing consuming 64.64%.
The data reveals a concerning trend: while total foreign payments in 2024 increased modestly by 2.71% compared to 2023, the proportion allocated to debt servicing surged significantly. ,
This indicates a growing reliance on external borrowing and a higher cost of debt repayment, which could crowd out funding for critical developmental projects.
According to Gill, the combination of record-level debt and soaring interest rates has set many developing nations on a precarious path, one that could lead to economic distress and tough decisions regarding the allocation of resources.