On the 31st of March 2026, President Bola Ahmed Tinubu sent a letter to the national assembly. In it, he asked for permission to borrow $6 billion from abroad. The request arrived wrapped in the usual language of fiscal responsibility, deficit financing, infrastructure priorities, and the N68.32 trillion budget framework that needed shoring up. Lawmakers will debate it, amend a clause or two, and approve it. This is how it always goes.
What the letter did not say, because no government letter ever says it, is that Nigeria’s total public debt had just crossed N159.28 trillion as of December 31, 2025. Or that this figure was up from N144.67 trillion the year before. Or that four years earlier, in 2021, the entire debt stock was N33.13 trillion. In other words, in four years, the number grew by 380 per cent.
Sit with that for a moment. Not 38%. Not 138%. Three hundred and eighty percent.
A new BudgIT analysis of the 2026 approved federal budget lays out these numbers in cold detail, and the picture it paints is one of a country that has quietly normalised a level of borrowing that would trigger alarm almost anywhere else. The question is not whether Nigeria can keep doing this. The question is what happens when it can’t, and how much closer we got to that point this year without anyone in government saying so out loud.
What the N159trn is actually made of
It’s worth pausing on what that N159.28tn figure actually represents. It isn’t just federal government debt. It’s the combined obligations of the federal government, the 36 states, and the FCT, rolled into one number. Of that total, BudgIT analysis shows that roughly N84.85 trillion sits in domestic debt and N74.43 trillion in external debt, a split of about 53% to 47%. But break it down further, the federal government alone accounted for about N80.49 trillion, while the 36 states and the FCT accounted for about N4.36 trillion, confirming that domestic borrowing is largely driven by federal deficit-financing needs rather than subnational borrowing pressures.
On the domestic side, FGN Bonds make up the largest chunk, at N63.63 trillion, followed by treasury bills at N13.85 trillion. These are instruments sold largely to Nigerian banks and pension funds, which means every naira the government borrows domestically is a naira that isn’t available for banks to lend to manufacturers or small businesses. BudgIT flags this directly: heavy domestic borrowing risks crowding out private sector credit, at exactly the moment the country needs that credit to flow.
On the external side, the creditor list reads like a roll call of Nigeria’s development relationships over the past decade. Multilateral lenders hold about $23.49 billion of the external debt, with the World Bank’s International Development Association alone accounting for $17.32 billion; Nigeria’s single largest external creditor. Commercial creditors, dominated by Eurobonds, hold about $17.32 billion. Bilateral lenders make up the rest, with China at $5.06 billion, France at $0.59 billion, Germany at $0.21 billion, and Japan at a comparatively modest $0.07 billion.
There’s a popular narrative in Nigeria that frames the debt conversation almost entirely around China, as if Beijing were the looming creditor waiting to seize national assets. The numbers don’t support that story. China’s share of the external debt is real but far from dominant. The bigger exposures sit with multilateral institutions and Eurobond holders, and those come with their own pressures, just less politically convenient ones to talk about.
There’s also a currency story buried in all of this. Between 2023 and 2025, the naira lost more than 250% of its value against the dollar. That devaluation alone inflated the naira value of Nigeria’s external debt, even in years when the country wasn’t necessarily taking on large amounts of new foreign borrowing. Part of the jump from N33.13 trillion to N159.28 trillion isn’t new debt at all. It’s old debt, repriced by a currency that fell off a cliff. That doesn’t make the number any less real. If anything, it should make policymakers more cautious about how much new external debt gets added to a balance sheet that is exposed to exchange rate swings.
The number that doesn’t tell the story
Here is the trick officials use, and it works because it sounds technical enough to shut down further questions: Nigeria’s debt-to-GDP ratio sits somewhere between 40% and 50%.
Debt-to-GDP is simply a country’s total debt measured against the total value of everything its economy produces in a year. Think of it like a salary check on a loan. If someone earns N10 million a year and owes N4 million, a bank might still consider that manageable, because the income is there to cover it eventually. That’s the logic behind the ratio. By global standards, 40% to 50% is moderate. Countries like Japan and the United States carry ratios several times higher and remain solvent. So, the argument goes, why worry?
The BudgIT report is blunt about why this framing is misleading. The salary check analogy only works if the salary actually shows up in your account and you can spend it. Nigeria’s problem isn’t the size of its economy relative to its debt. It’s whether government revenue, the actual cash that comes in, is enough to cover what’s owed. For that, you need a different number: debt service to revenue. And that number tells a much darker story.
In the 2026 budget, debt servicing is projected at N15.81 trillion. That is roughly 23% of total government spending, and close to 45% of the revenue the government expects to collect. But projections are one thing. The actual numbers from 2025 are worse. By the third quarter of that year, debt service had reached N12.52 trillion against revenue of N18.63 trillion, a ratio of 67.2%. Some reports put the figure even higher, at 72% of federally retained revenue for parts of the year.
Read that again. Two out of every three naira the government collects, sometimes closer to three out of four, goes straight to paying off debt before a single school, hospital, or road gets a kobo.
BudgIT calls this a debt trap, and the description fits. The government borrows to cover the deficit. Debt service eats most of the revenue. The shortfall forces more borrowing. Each new loan adds to next year’s service bill, which widens next year’s shortfall, which demands a bigger loan. Nigeria isn’t approaching this cycle. It is already inside it, and has been for some time.
The $6 billion question
Which brings us back to that March letter. A $6 billion external borrowing request, on its own, is not unusual or even unreasonable. Governments borrow. Infrastructure needs financing. The question that should accompany any new borrowing request, especially one this size, is simple: borrowing for what, and at what cost to a debt service bill that is already consuming nearly half of projected revenue?
The 2026 budget includes N29.19 trillion in deficit financing through fresh domestic and foreign borrowing. Add the $6 billon request on top of that, and the trajectory becomes clearer. Debt servicing will rise again next year. And the year after that. Each cycle locks in a little more of the budget before a single policy decision gets made, because the money is already spoken for.
This is what makes the debt-to-GDP defence so hollow. It treats Nigeria’s debt as a static fact, a number you can compare to other countries and feel reassured. But debt isn’t static. It compounds. And the compounding is happening faster than the economy or the revenue base that’s supposed to support it.
There is also a part of Nigeria’s debt that doesn’t show up in the N159.28 trillion headline figure at all. The Nigerian Bulk Electricity Trading Company, the federal entity that sits between power generation companies and the national grid, owes those GenCos roughly N6.6 trillion. This money exists because of unpaid tariffs, subsidy gaps, and a power sector that has run on IOUs for years. It is not counted as part of the official public debt stock. But it is real money owed by a federal entity, and at some point, someone will have to pay it. When that happens, it becomes part of the same fiscal hole that everything else falls into.
Multiply this kind of arrangement across the dozens of government-owned enterprises that operate with weak oversight and patchy financial disclosure, and you get a sense of how much of Nigeria’s real exposure sits outside the numbers anyone is required to report.
Please, get my point
None of this means Nigeria should stop borrowing. Few developing economies build infrastructure without external financing, and there’s nothing inherently irresponsible about a government taking on debt to fund roads, power plants, or rail lines that will generate returns for decades.
The problem is what the borrowed money has actually been going toward. A government that borrows to build a power plant that adds capacity to the grid is doing something different from a government that borrows to cover a revenue shortfall created by its own optimistic projections, year after year, while the underlying problems that caused the shortfall go unaddressed.
BudgIT’s report makes this point directly: the debt itself isn’t the core failure. The failure is that so much of it has financed deficits rather than productive investment, propping up budgets that overestimate revenue rather than building the capacity to generate more of it.
Until that changes, the N159.28tn figure will keep climbing, the debt service ratio will keep eating into whatever revenue does materialise, and every March, another letter will arrive in the National Assembly asking for more. Nobody in Abuja is required to answer for any of this. Maybe they should be.
SOURCE: TheCable
