Nigeria’s Debt Sustainability Crisis: What It Means for You

When most Nigerians think about government borrowing, it feels like a distant policy issue, something debated in Abuja that doesn’t touch everyday life. But Nigeria’s rising debt burden is not an abstract number. It influences the prices you pay for food, the electricity bill you struggle with, and the quality of public services like schools and hospitals.

In 2025, the question of debt sustainability has become central to the Nigerian economy. Debt sustainability simply means the government’s ability to continue borrowing and repaying without falling into a financial trap. The signs are worrying.

Nigeria’s debt stock has grown sharply in the last decade. With oil revenues shrinking due to global price swings, theft, and under-production, the federal government has relied heavily on borrowing to fund its budgets. Every year, new loans are taken to cover deficits in salaries, infrastructure, subsidies, and security.

The 2025 budget revealed a striking figure: debt servicing consumes more than 70% of government revenue. In other words, for every ₦100 Nigeria earns, about ₦70 goes straight to creditors before anything else can be spent. This leaves little to no room for investment in health, education, or job creation.

Nigeria borrows from two main sources:

• External lenders include the World Bank, IMF, Eurobond investors, and bilateral partners such as China.

• Domestic lenders like Nigerian banks and pension funds.

External debt exposes Nigeria to foreign currency risks. If the naira weakens, repayments become more expensive. Domestic borrowing can crowd out the private sector, because banks prefer lending to government rather than businesses. Both routes have costs that eventually trickle down to citizens.

The Impact on Everyday Nigerians

1. Higher Taxes and Levies To raise revenue, the government increases taxes on goods, services, and personal income. For instance, higher VAT or new surcharges on telecoms and banking transactions directly raise the cost of living.

2. Inflation: Heavy borrowing, especially when financed through the Central Bank, fuels money supply growth. More money chasing fewer goods drives inflation. Nigerians already face record food and transport inflation in 2025.

3. Cuts in Social Spending. With most revenue going to debt servicing, less is available for schools, hospitals, and infrastructure. Citizens see declining public services while paying more.

4. Exchange Rate Pressure: Servicing foreign debt drains dollar reserves. This worsens naira depreciation, which then raises the cost of imports from fuel to medicine.

What This Means for You

For the ordinary Nigerian, debt sustainability might sound like a technical issue. But its effects are visible every time you notice the price of garri or rice rising faster than your salary, the hospital near you lacking basic drugs, or the naira falling, making foreign goods unaffordable.

Debt is not inherently bad; countries borrow to grow. The danger is when repayments consume so much that little is left for development. Nigeria is walking that tightrope today.

Nigeria’s debt challenge is not just about big numbers in government reports. It is about whether citizens will see better schools, reliable electricity, affordable food, and real jobs. Until the government strikes a balance between borrowing and earning, the debt burden will continue to shape the economy and the lives of ordinary Nigerians.