SNOW TV NEWS DESK
Nigeria’s private sector is becoming increasingly exposed to foreign debt, with borrowings by local companies from international lenders rising by 179.6 per cent in seven years to $54.48 billion in 2025, according to the World Bank.
The figure, which represents almost a threefold increase from the $19.49 billion recorded in 2018, highlights the growing dependence of Nigerian businesses on foreign financing amid persistent economic challenges, high operating costs, and limited access to affordable long-term credit.
The World Bank disclosed this in its International Debt Report 2026, which put Nigeria’s private sector nonguaranteed external debt at $54.476 billion as of December 2025.
Unlike government borrowing, private sector nonguaranteed debt refers to loans obtained by private companies from foreign banks, investors, and other international creditors without repayment guarantees from the government.
The report showed that the growth in private companies’ foreign debt outpaced the 155.5 percent increase in public and publicly guaranteed external debt, which climbed from $24.42 billion in 2018 to $62.4 billion in 2025.
This means private sector foreign obligations are now approaching the size of Nigeria’s government-backed external debt. In 2018, private sector debt represented about 79.8 percent of public and publicly guaranteed external debt. By 2025, the proportion had increased to 87.3 percent.
Meanwhile, Nigeria’s total external debt, covering government-backed borrowing, private sector obligations, and short-term liabilities, rose sharply from $46.24 billion in 2018 to $145.02 billion in 2025.
Costly Foreign Borrowing Raises Concerns
Beyond the growing debt stock, the World Bank report highlighted the significantly higher cost of borrowing from private international creditors.
New loans obtained by Nigeria from private foreign lenders in 2025 carried an average interest rate of 9.6 per cent, compared with just 1.9 per cent for loans from official creditors, including foreign governments and multilateral institutions.
Private lenders also offered shorter repayment periods, averaging 12 years, against 25 years for official creditors.
The difference suggests that Nigerian businesses face considerably more expensive financing conditions in international markets, potentially increasing pressure on their cash flows and profitability.
What This Means for Nigerian Businesses
The rising debt is not necessarily a sign of economic weakness, as foreign borrowing can help companies expand operations, invest in infrastructure, acquire equipment, and increase production.
However, the growing exposure also creates risks, particularly for businesses earning revenue in naira but servicing loans in foreign currencies. Exchange-rate depreciation can significantly increase the naira value of their outstanding debt and repayment obligations.
The bigger concern is whether these loans are generating enough productive returns to justify their cost.
For Nigeria, the challenge is to ensure that foreign borrowing supports productive investment rather than becoming another financial burden on businesses already struggling with high interest rates, inflation, and currency volatility.
“Sir Bartholomew White Ebe is a Lagos-based media personality, Music Artist, Producer, and a Relationship Coach and independent journalist. With over seven years of experience tracking political developments and cultural shifts in Nigeria, he specializes in local current affairs, grassroots politics, and community-driven reporting across Lagos State. As the founder and chief editor of Snow Multimedia Connect {SNOW TV}, he leads the editorial team to deliver verified, high-impact stories to digital audiences.”
Email: snowmediaconnect@gmail.com
