World Bank, China Holds $23.2bn Of Nigeria’s $51bn External Debt Burden

…Eurobond Obligations Add Fresh Pressure To Debt Service Costs

Nigeria’s external debt profile continues to reflect heavy dependence on multilateral institutions and a small group of bilateral lenders, with fresh analysis showing that a significant share of obligations is concentrated among a few major creditors.

THE WHISTLER findings indicate that Nigeria’s external debt stock, estimated at about $51bn, is largely driven by concessional loans from multilateral institutions, bilateral agreements with foreign governments, and exposure to international capital markets through Eurobonds.

Data obtained from the Debt Management Office reviewed by THE WHISTLER showed that multilateral loans accounted for approximately $23.19bn, representing about 45 per cent of Nigeria’s total external debt portfolio.

At the centre of this exposure is the World Bank, which remains Nigeria’s single largest external creditor.

Findings further revealed that outstanding obligations to the institution are estimated at $18.3bn, making Nigeria one of its most significant borrowers under the International Development Association (IDA) window, which provides low-interest financing to developing economies.

Since mid-2023, the Federal Government has reportedly secured more than $7bn in fresh World Bank financing, with funds directed toward key sectors including power infrastructure, agriculture, healthcare delivery, education support, and targeted social intervention programmes.

The scale of borrowing underscores Nigeria’s continued reliance on concessional funding to support budgetary needs and long-term development projects amid fiscal constraints.

The African Development Bank also plays a significant role in Nigeria’s external financing structure, with outstanding loans estimated at about $3.5bn.

The AfDB’s exposure to Nigeria spans infrastructure development, agricultural value chains, energy access programmes, and private sector support initiatives aimed at improving productivity and regional competitiveness.

Together with the World Bank, multilateral creditors remain the backbone of Nigeria’s external borrowing framework, reflecting a continued preference for concessional financing over more expensive commercial debt instruments.

Beyond multilateral funding, Nigeria’s bilateral debt such as loans owed directly to foreign governments and their agencies—stands at approximately $6.2bn.

Within this category, the Export-Import Bank of China dominates Nigeria’s exposure. Chinese loans account for about $4.91bn, representing more than 80 per cent of total bilateral obligations.

These facilities have been used to finance major infrastructure projects across rail transportation, airport modernization, power generation, and telecommunications expansion.

However, the concentration of bilateral borrowing has continued to attract scrutiny from analysts and policymakers, particularly regarding loan transparency, repayment terms, and the long-term fiscal implications of infrastructure-linked debt.

In addition to concessional and bilateral borrowing, Nigeria maintains exposure to international capital markets through Eurobonds, which form a key component of its commercial debt profile.

Unlike multilateral loans, Eurobonds are issued at market-determined interest rates and are subject to global investor sentiment, making them more vulnerable to external shocks such as rising interest rates and tightening liquidity conditions.

It was learnt that the tightening of global financial conditions driven by persistent inflationary pressures in advanced economies has increased the cost of borrowing for emerging markets, including Nigeria.

As yields rise, refinancing existing obligations and issuing new Eurobonds becomes significantly more expensive, placing additional pressure on debt servicing obligations.

Nigeria has expended a cumulative $9.8bn on servicing its foreign obligations over five years, based on data from the Debt Management Office (DMO).

Eurobond repayments alone accounted for $2.493bn, reinforcing concerns over the cost and structure of commercial borrowing.

IMF obligations eased to $816.28m, while IDA payments rose further to $769.235m.

The combined structure of Nigeria’s debt profile highlights a dual challenge: while concessional financing from multilateral lenders provides relatively cheaper funding, increasing reliance on commercial borrowing exposes the country to volatile global financial conditions.

Economists noted that rising global interest rates have already reshaped borrowing strategies across developing economies, with many governments shifting back toward concessional windows where possible.

However, fiscal needs and infrastructure financing gaps continue to push countries like Nigeria into capital markets despite higher costs.

With multilateral lenders accounting for the largest share of Nigeria’s external debt and China remaining dominant in bilateral exposure, experts said the country’s borrowing structure remains heavily concentrated among a few key creditors.

According to them, rising Eurobond costs signal increasing pressure on Nigeria’s debt servicing outlook, particularly if global interest rates remain elevated for longer than expected.

The Group Managing Director, Crane Securities Limited, Mr. Mike Eze in an exclusive chat with THE WHISTLER said the pace of debt accumulation is becoming a major macroeconomic concern, especially when you compare it with the growth rate of government revenue and productive investment.

According to him a debt stock of over N159trn is not necessarily bad for a large economy, but the main issue is the debt-service-to-revenue ratio, adding that when a country spends over 70 per cent of its revenue servicing debt, fiscal sustainability comes under pressure.

Eze also blamed a significant portion of the increase to exchange rate depreciation, because external debts are converted into naira terms. He noted however, that this reason cannot fully account for the sharp growth in domestic borrowing.

He called on the government to prioritise aggressive revenue reforms, reduction in the cost of governance, and stronger accountability for borrowed funds.

“Borrowing should be tied strictly to projects that can stimulate growth, exports, and productivity. What these numbers reveal is not just a debt problem, but a governance and productivity crisis.

Nations can borrow responsibly if the funds are invested in sectors that expand economic capacity and improve citizens’ welfare. The concern in Nigeria is that despite the rapid rise in public debt over the last decade, infrastructure deficits, poverty, unemployment, and insecurity have continued to worsen, he said.

A financial analyst, Mr. Dele Johnson said that the increase is alarming, but part of the expansion is due to the naira devaluation after the exchange rate reforms.

Johnson noted that once the naira weakened, the local currency value of external obligations naturally surged. That said, the underlying fiscal vulnerabilities remain serious because debt servicing continues to absorb a disproportionately high share of government revenue.

According to him, the bigger risk is not just the size of the debt, but whether the economy can generate enough growth and foreign exchange earnings to sustain repayments without crowding out critical investments.

“Nigeria needs stronger export earnings, higher oil production, improved tax efficiency, and disciplined spending. Without faster economic growth, rising debt could continue to weaken investor confidence and constrain development financing,” he said.

ENDS