Nigeria’s total debt servicing climbed to N15.81tn in 2025, representing a N2.98tn increase from N12.83tn recorded in 2024, according to data released by the Debt Management Office.
An analysis of the DMO’s actual debt service reports shows that the 23.2 per cent year-on-year rise was largely driven by a sharp increase in domestic interest payments and continued external obligations.
Domestic debt servicing rose significantly from N5.87tn in 2024 to N8.61tn in 2025, marking a N2.74tn increase or about 46.7 per cent within the period.
As a result, domestic debt accounted for approximately 54.5 per cent of total debt servicing in 2025, compared with about 45.8 per cent in 2024. The shift highlights a growing reliance on local borrowing instruments in Nigeria’s debt profile.
External debt servicing also increased during the period, rising from $4.66bn in 2024 to $5.15bn in 2025. This represents an increase of $490m or about 10.5 per cent.
Using the Central Bank of Nigeria’s official exchange rates adopted by the DMO, external debt servicing translated to roughly N7.15tn in 2024 at N1,535.3176 per dollar and N7.39tn in 2025 at N1,435.2571 per dollar.
In naira terms, this represents a N240bn increase or about 3.4 per cent year-on-year.
Despite the rise, the share of external debt servicing in total obligations declined from roughly 55.8 per cent in 2024 to 45.5 per cent in 2025, reflecting faster growth in domestic debt costs.
A detailed breakdown of domestic debt servicing showed that interest payments accounted for the overwhelming portion of obligations.
Interest costs rose from N5.60tn in 2024 to N8.24tn in 2025, an increase of N2.64tn or about 47.1 per cent.
Interest payments alone represented about 95.7 per cent of total domestic debt service in 2025, compared with 95.4 per cent in 2024. This indicates that most payments are directed toward servicing interest rather than repaying the principal.
Among the instruments, Federal Government bonds remained the largest component, with interest payments increasing from N4.69tn in 2024 to N5.35tn in 2025, reflecting a N663.38bn rise or about 14.1 per cent.
However, the most dramatic increase was recorded in Nigerian Treasury Bills. Interest payments on the short-term instruments surged from N747.15bn in 2024 to N2.55tn in 2025, representing a rise of N1.80tn or about 241 per cent.
This sharp growth suggests an increased reliance on short-term borrowing instruments.
The share of Treasury bills in total domestic interest payments rose to about 31 per cent in 2025 from 13 per cent in 2024, while the share of Federal Government bonds declined from about 83.7 per cent to roughly 65 per cent, although bonds still accounted for the largest single portion.
Other debt instruments also recorded increases. Interest on FGN Savings Bonds rose from N6.38bn in 2024 to N13.59bn in 2025, representing a 113 per cent increase, though it accounted for less than 0.2 per cent of total domestic interest payments.
Sukuk bond rentals increased slightly from N158.43bn in 2024 to N171.73bn in 2025, while Green Bond payments rose from N2.18bn to N6.67bn, reflecting a more than 200 per cent increase from a relatively low base.
On the principal side, domestic debt repayments increased from N265.86bn in 2024 to N370.93bn in 2025, representing a rise of N105.07bn or about 39.5 per cent.
However, principal repayments accounted for only about 4.3 per cent of total domestic debt service in 2025, reinforcing the dominance of interest payments in the country’s domestic debt structure.
Monthly data showed uneven payment patterns, with several months recording exceptionally high obligations due to bond coupon payments and Treasury bill maturities.
For example, domestic debt servicing exceeded N1tn in March 2025, reflecting peak payment cycles associated with major debt instruments.
On the external front, Nigeria spent a total of $5.15bn on debt servicing in 2025. This included $3.06bn in principal repayments, $2.03bn in interest payments, and $59.21m in other charges.
Principal repayments accounted for about 59.4 per cent of external debt servicing, while interest payments made up roughly 39.5 per cent.
Commercial creditors represented the largest share of external obligations, accounting for $2.55bn or about 49.6 per cent of total payments.
Within this category, Eurobond repayments amounted to $2.49bn, representing roughly 48.4 per cent of total external debt service and more than 97 per cent of commercial debt payments.
Multilateral creditors accounted for $1.996bn, representing about 38.8 per cent of total external debt service.
Payments to the International Development Association of the World Bank stood at $769.24m, while obligations to the International Monetary Fund totalled $816.29m, largely reflecting principal repayments.
Other multilateral creditors included the African Development Bank, African Development Fund, Islamic Development Bank, International Fund for Agricultural Development, and the European Investment Bank.
Bilateral creditors accounted for $599.95m, representing about 11.6 per cent of total external debt servicing.
China’s Exim Bank dominated this segment with $475.77m, accounting for nearly 79 per cent of bilateral payments. Other creditors included Agence Française de Développement, Exim Bank of India, Japan International Cooperation Agency, Germany’s KfW, and the China Development Bank.
Overall, the data suggest that Nigeria’s debt service burden is increasingly dominated by domestic obligations, particularly interest payments on both short- and long-term securities.
The rising debt servicing costs come amid growing fiscal pressure on the federal budget. Data also show that debt servicing exceeded capital expenditure by N3.9tn between 2024 and 2025.
The Federal Government has also expanded its borrowing plan for 2026 to N29.20tn, up from the earlier projection of N17.89tn contained in the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning.
Commenting on the situation, the Programme Manager of the Sustainable Nigeria Programme at Heinrich Böll Stiftung, Ikenna Ofoegbu, warned that rising debt costs continue to strain public finances.
“Our debt servicing is about 60 per cent to 70 per cent. It has come down from about 80 per cent to 90 per cent. So now we’re about 60 per cent to 70 per cent,” he said.
He also criticised the lack of transparency in public finance reporting.
Similarly, the Executive Director of the Centre for Inclusive Social Development, Folahan Johnson, emphasised the human consequences of rising debt obligations.
“The true cost of debts is the out-of-school child, the out-of-school girl,” he said.
“The true cost of debts is that a woman who has to do business loses her life because of lack of access to basic maternal health care.”
