Nigeria and other Sub-Saharan African nations need to start export diversification and fiscal reforms to deal with their growing debt problems, the World Bank has cautioned.
Its recently published International Debt Report 2025 included this information.
Nigeria and other nations in the region’s external debt burdens continued to rise despite slow growth, according to the report, which identifies Sub-Saharan Africa as an anomaly where debt levels and servicing costs increased through 2024 amid a muted GDP, driven by countercyclical official financing rather than investment.
According to The PUNCH, Nigeria’s public debt stock, which comprises both domestic and foreign debt, increased 2.01% on a quarterly basis from N149.38 trillion (US$97.23 billion) in the first quarter of 2025 to N152.39 trillion (US$99.65 billion) in the second quarter.
As the government continues to borrow money to cover the budget deficit, financial commentators have expressed alarm over the nation’s debt profile.
Having just received permissions for N1.15 trillion in domestic loans in late 2025 for the 2025 budget, the government intends to borrow N17.89 trillion in 2026, according to the 2026 budget framework acquired from the Budget Office of the Federation.
According to regional patterns from 2015 to 2024, the World Bank claims that Sub-Saharan Africa deviated from other regions following the COVID-19 pandemic, with external debt holdings increasing annually while output lagged.
According to the paper, “Sub-Saharan Africa stands out as an exception since both debt levels and servicing burdens have continued to rise even as growth remains subdued, underscoring persistent fiscal stress.” Between 2020 and 2024, negative correlations between GDP growth and debt accumulation became more pronounced in SSA, with 64% of LMICs on the continent exhibiting this pattern.
According to the report, SSA’s vulnerabilities were exacerbated by excessive debt, which crowded out infrastructure, health, and education and linked to institutional weakness and nutrition insecurity.
Because nations with weaker institutions are more vulnerable, the report cautions that “high external debt burdens are also associated with broader systemic fragility.” In 2025, LMIC growth falls to 4.3% due to trade disputes.
In the meantime, Nigeria returned to foreign markets in 2024 after a year-long hiatus, raising $2.2 billion in Eurobonds at yields of 9.625 percent and 10.375 percent to finance its budget shortfall.
In 2024, private creditor commitments in low- and medium-income countries averaged 5.89 percent, according to the World Bank. IDA-eligible issuances, such as Nigeria’s and Kenya’s $1.5 billion Eurobond (9.75 percent coupon), reflect renewed investor confidence, but at elevated rates unseen since pre-2008 crisis levels.
According to the report, “Nigeria successfully raised US$2.2 billion in Eurobonds to help fund its budget deficit,” while bond flows from Sub-Saharan Africa increased by 55.6% to $27.7 billion. However, principal repayments are a major concern, with LICs expected to increase by 87.5% by 2026.
Nigeria, together with Djibouti and Angola, had one of Africa’s biggest current account surpluses in 2024, defying LMIC deficits but clustering with high-risk peers like Kenya, Mozambique, and Zambia, according to the World Bank.
The research emphasized that 23 LMICs had current account surpluses as of 2024, with Africa (Djibouti, Nigeria, and Angola) having the greatest, followed by a number of European and Central Asian nations (Azerbaijan and Tajikistan).
According to the report, Nigeria received World Bank inflows alongside Bangladesh, Kenya, and Pakistan, making it one of the top borrowers eligible for the International Development Association.
Nigeria was one of the main recipients of the record credit from multilateral creditors, which reached US$36 billion in 2024 after increasing by 30.4%, according to the World Bank.
With US$70.1 billion in net debt inflows in 2024, multilateral creditors remained the largest source of assistance for LMICs, albeit at a considerably slower rate after the extraordinary help given during the COVID-19 pandemic. Multilateral creditors’ net debt flows, which made up 48.5% of net long-term debt inflows to LMICs, fell 5.1% in 2024.
“Net flows from the World Bank (International Bank for Reconstruction and Development and International Development Association lending) increased 30.4% in 2024 to an all-time high of $36 billion, despite the general decline. 51.3% of net flows from multilateral institutions came from them. The biggest recipients of these monies were Bangladesh, Kenya, Nigeria, the Philippines, and Ukraine. At US$15.5 billion, the European Union had the second-largest net debt flows by volume in 2024, primarily due to assistance given to Ukraine, the report noted.
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