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Nigeria’s Debt Burden in a Shifting Global Finance Landscape

  • Writer: Derry Thornalley
    Derry Thornalley
  • Sep 24
  • 2 min read

Nigeria has long been Africa’s biggest economy — and with that size comes big financing needs. But in 2025, a new reality is settling in: borrowing has become far more expensive, and it is reshaping how the country funds its growth.


A recent Moody’s assessment placed Nigeria alongside Kenya and South Africa as the African economies hardest hit by surging financing costs. Even as global spreads ease slightly, the price Nigeria pays to borrow — both at home and abroad — remains high compared to international peers.


Why Borrowing Costs Are Rising

There are several reasons:

  • Policy credibility gaps have made investors cautious, demanding higher risk premiums.

  • Persistent inflation continues to pressure the naira and erode returns.

  • Global conditions — with rates still elevated in major economies — make external borrowing costlier for all emerging markets.


The result is a financial squeeze that affects not just government coffers, but also banks and corporates across Nigeria.

The Trade-Offs Nigeria Faces

Nigeria must now walk a tightrope: how to keep funding critical sectors like energy, agriculture, and technologywithout letting debt spiral out of control.


That means:

  • Deepening domestic capital markets so local investors can play a bigger role.

  • Considering debt restructuring where viable, to ease repayment profiles.

  • Committing to fiscal discipline that reassures both citizens and investors.


Why It Matters

The stakes go beyond balance sheets. For ordinary Nigerians, higher borrowing costs translate into tougher access to credit, slower job creation, and tighter government budgets for essential services.


For global investors, Nigeria’s choices will signal whether Africa’s largest economy is ready to adapt to a tougher financing environment or continue relying on costly stopgap measures.


My Take

Nigeria’s debt story is not unique, but it is amplified by its scale. With the right reforms — credible fiscal policies, stronger domestic markets, and strategic use of its vast resources — Nigeria can reposition itself even as global finance shifts.


But without action, the country risks carrying a debt burden that crowds out the very growth it seeks

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