SNOW TV NEWS DESK
Nigeria is paying a significantly higher price for accessing private international loans, with interest rates on new external borrowing from commercial creditors averaging 9.6 per cent in 2025, compared with just 1.9 per cent from official lenders, according to the World Bank Group.
The figures highlight the growing financial pressure associated with Nigeria’s external borrowing, as the country’s total external debt stock climbed to $145.02bn in 2025.
Data from the World Bank’s latest International Debt Statistics show that private creditors charged Nigeria five times more interest than official lenders, underscoring the financial risks of relying on expensive commercial financing to meet funding needs.
Beyond the interest rate difference, the terms of the loans also reveal an important contrast. Official lenders provided loans with an average maturity of 25 years and a five-year grace period, while private creditors offered an average maturity of 12 years and an eight-year grace period.
Although private loans came with a longer initial grace period, their significantly higher interest rates and shorter repayment timelines could increase the long-term cost of servicing Nigeria’s debt.
Nigeria’s External Debt Continues to Grow
The World Bank report showed that Nigeria’s external debt increased by 6.6 percent in 2025, extending a steady upward trend over the past decade.
External debt rose from $83.21bn in 2015 to $145.02bn in 2025, representing an increase of approximately $61.8bn within 10 years.
Of the current debt stock, $62.40bn represents public and publicly guaranteed debt, while private nonguaranteed debt accounts for $54.48bn. Short-term external obligations make up the remaining $28.14bn.
Multilateral creditors hold $31.37bn of Nigeria’s public and publicly guaranteed debt, while bilateral lenders account for $6.68bn. Private creditors hold another $24.35bn.
The International Development Association, the World Bank’s concessional lending arm, remains Nigeria’s largest multilateral creditor, with $18.53bn outstanding.
China is the country’s largest bilateral creditor, holding $5.67bn, followed by France with $774m.
Rising Debt Service Raises Concerns
One of the more concerning aspects of the report is Nigeria’s debt service burden relative to its foreign exchange earnings.
The country’s debt service-to-export ratio stood at 19 per cent, representing a 9.6 per cent increase, while debt service as a share of gross national income rose by 6.9 per cent to five per cent.
Interestingly, external debt as a proportion of gross national income declined by 6.6 per cent to 51 per cent, while the external debt-to-export ratio fell by 4.3 per cent to 212 per cent.
This suggests that improvements in some debt sustainability indicators have not necessarily translated into reduced repayment pressure.
For Nigeria, the challenge goes beyond how much it borrows. The cost of borrowing, repayment schedules, and the ability to generate sufficient foreign exchange will determine how sustainable the country’s debt position becomes.
The latest figures reinforce the importance of prioritizing cheaper financing, strengthening domestic revenue generation, and ensuring that borrowed funds support projects capable of generating economic returns.
As external debt continues to expand, the real test for Nigeria will be whether the loans it secures can deliver enough economic value to justify the cost of servicing them.
“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
