Nigeria is drowning in debt, but not in the way the headlines usually say. The country has not gone bankrupt. Instead, it is caught in a quieter, more dangerous trap: earning money only to hand it straight back to lenders. With public debt now at N159.35 trillion, the Federal Government is borrowing at record speed in 2026 just to keep the lights on, while schools, hospitals and roads wait. Every new loan feels less like an investment in tomorrow and more like a lifeline to survive today. The real crisis is no longer the size of what we owe. It is what that debt is costing us in jobs, in growth, and in the future we keep postponing.
Nigeria’s public debt has climbed to N159.35 trillion, or about $110.97 billion as of March 2026, according to data from the Debt Management Office. Of this, N84.85 trillion is domestic debt while N74.43 trillion is external debt. That means domestic borrowing now accounts for 53.27% of the total, a deliberate shift by government to reduce exposure to foreign exchange risk. The strategy is clear in the numbers. In the first half of 2026 alone, the Federal Government raised N7.6 trillion from the domestic market, with N4.42 trillion from FGN bonds and N3.18 trillion from Treasury Bills. T-Bill issuances alone surged by 59.8% year-on-year to N12.75 trillion. Other domestic instruments include FGN Sukuk at N1.19 trillion, FGN Savings Bond at N116.21 billion, green bonds at N62.36 billion, and promissory notes at N1.39 trillion.
On the external side, Nigeria’s debt stood at $51.90 billion as of March 2026. Multilateral institutions remain the largest source, holding $23.86 billion, or 45.96% of external debt. The World Bank’s International Development Association accounts for $18.39 billion of this, making Nigeria the third largest IDA debtor globally. Commercial debt, mainly Eurobonds, stands at $18.23 billion. Bilateral loans total $6.59 billion, with China Exim Bank holding $4.95 billion and China Development Bank $507.52 million. Syndicated loans make up another $2.86 billion. In 2026 the Senate approved a new $6 billion external facility to be drawn in tranches, including a $1 billion UK export finance loan through Citibank London for the rehabilitation of Lagos Port Complex and Tin Can Island Port. That loan is structured as a Total Return Swap and collateralized with naira-denominated FGN securities at 133.3%, meaning local assets are being pledged to secure foreign currency.
The more troubling figures are not in the size of the debt but in the cost of servicing it. For 2026, the Federal Government has budgeted N15.91 trillion for debt service, split into N10.16 trillion for domestic obligations and N5.36 trillion for external payments. That represents over 26% of the entire 2026 budget. The World Bank in its April 2026 Nigeria Development Update noted that while Nigeria’s debt-to-GDP ratio of 32.3% remains below international thresholds, the debt-service-to-revenue ratio hit 49.5% in 2025. In practical terms, almost 50 kobo of every naira earned by government in 2025 went to paying interest and principal, leaving less for everything else.
This burden is already reshaping spending. With recurrent costs and debt service consuming most of available revenue, capital expenditure has been squeezed. Capital spending fell from 1.3% of GDP in 2024 to 1.0% in 2025. The World Bank described this as a fiscal “squeeze” that has made capital investment the “primary adjustment margin” in the federal budget. At the same time, government’s heavy borrowing from the domestic market is crowding out the private sector. Banks find it safer and more profitable to lend to government at double-digit rates than to manufacturers and SMEs, pushing private lending rates above 30% and slowing job creation.
The borrowing is also accelerating. Under the Appropriation Act 2026, FG plans to borrow N29.20 trillion to fund the gap between projected revenue of N68.32 trillion and expenditure of N36.87 trillion. That is an increase of N11.31 trillion from the initial projection of N17.89 trillion. In the first quarter of 2026 alone, the government had already borrowed N8.1 trillion domestically, and with the newly approved $6 billion external loans, it is on course to exceed its annual target again. Between March 2025 and March 2026, total public debt rose by N9.96 trillion, with domestic debt accounting for 87% of that increase.
The implications are direct. First, less money is available for infrastructure, health, and education because debt service takes priority. Second, the need to pay N5.36 trillion in foreign currency in 2026 adds pressure on the naira and on CBN reserves, feeding imported inflation even as government borrows locally to avoid FX exposure. Third, the reliance on short-term instruments like Treasury Bills and Ways and Means means interest costs will keep rising, creating a cycle where new borrowing is used to pay old debt.
Nigeria is not technically insolvent. The debt-to-GDP ratio is still manageable. But the economy is facing a liquidity crisis driven by servicing costs. Until the ratio of debt service to revenue falls significantly below 50%, every new loan, whether for ports, social programs, or budget support, risks deepening the cycle. The challenge now is whether borrowing can be tied to projects that generate returns higher than the interest paid. Without that shift, the N159 trillion debt stock will continue to grow, and the budget will keep paying for the past instead of investing in the future.
