World Bank Emerges Nigeria’s Biggest Creditor With $18bn Exposure

…Multilateral Institutions Hold Nearly Half Of Nigeria’s External Debt

Nigeria’s total public debt has continued to expand, reaching N152.40tn as of June 30, 2025, despite ongoing fiscal reforms aimed at curbing borrowing.

The latest figures from the Debt Management Office showed that multilateral lenders, led by the World Bank now account for nearly half of the nation’s external liabilities, underscoring Nigeria’s deepening reliance on concessional financing.

According to the DMO’s data, the new debt level marks a N3.01tn increase from the N149.39tn recorded at the end of March.

In dollar terms, total debt climbed from $97.24bn to $99.66bn, representing a 2.49 percent rise within three months.

Nigeria’s external debt stood at $46.98bn (N71.85tn) by mid-2025, up from $45.98bn (N70.63tn) in the first quarter.

The DMO report revealed that multilateral institutions collectively held $23.19bn, or 49.4 percent of the country’s external borrowings.

The World Bank, through the International Development Association (IDA), remains Nigeria’s single largest creditor with an outstanding exposure of $18.04bn

Bilateral debts accounted for $6.20bn, with the Export-Import Bank of China leading at $4.91bn, followed by smaller exposures to France, Japan, India, and Germany. Commercial loans, mainly Eurobonds totalled $17.32bn, representing 36.9 percent of total external debt. An additional $268.9m was owed through syndicated loans and commercial bank credit lines.

Analysts say the heavy dependence on Eurobonds and commercial loans exposes the country to fluctuations in global interest rates, while the growing share of multilateral debts reflects a continued preference for long-term, low-interest financing.

On the domestic front, Nigeria’s debt stock rose to N80.55tn by June, up from N78.76tn in March.

Long-term federal government bonds dominated this segment, accounting for N60.65tn, or 79.2 percent of total domestic obligations.

This included N36.52tn in naira-denominated bonds, N22.7tn in securitised Ways and Means advances, borrowings from the Central Bank and N1.40tn in dollar-denominated bonds.

The steady increase in securitised Ways and Means advances highlights the government’s persistent fiscal pressure, even as it turns increasingly to the bond market to finance budget deficits.

Out of the total N152.40tn, the federal government accounted for N141.08tn, or 92.6 percent of the national debt stock.

This comprised N64.49tn in external borrowings and N76.59tn in domestic debt.

The DMO explained that external debts were converted to naira using the Central Bank’s official rate of N1,529.21 to the dollar as of June 30, 2025.

The weaker naira compared with the previous quarter contributed significantly to the higher domestic value of foreign loans, even in the absence of large new borrowings.

This underscores the vulnerability of Nigeria’s debt profile to currency depreciation, as fluctuations in exchange rates can inflate the naira-denominated value of external obligations.

Although Nigeria’s debt-to-GDP ratio remains below international danger thresholds, experts have warned that the pace of borrowing and the rising cost of servicing debt pose long-term risks to fiscal stability.

The Economist and Senior Partner at SPM Professionals, Paul Alaje questioned the government frequent borrowing, stating that its not sustainable.

He said the government should focus on blocking revenue leakages within the economy.

Alaje said, “The challenge is that we seem not to have the capacity to block those leakages. On the second part, we have a lot of mineral resources,” adding “If we don’t get our minings sector right, the truth is that we will still complain no matter what government does with crude oil because that revenue is not sufficient for our government and also for reserves to help us.”

Alaje insisted that revenue generation is possible. The expert argued that the government can generate between N7tn to N8tn from the telecommunication sector.

“We can generate between N7tn to N8tn more than what we are doing today,” he added.