By David Akinmola
Nigeria spent $2.86 billion on external debt servicing between January and August 2025, according to the latest data from the Central Bank of Nigeria (CBN), marking a moderation from the $3.06 billion paid during the same period last year.
The figure represents a 6.5 per cent year-on-year decline, even as debt service continues to dominate the country’s foreign exchange outflows. The CBN report shows that debt payments accounted for 69.1 per cent of total foreign payments of $4.14 billion in the first eight months of 2025, compared with 70.7 per cent of $4.33 billion in 2024.
In effect, for every $10 that left Nigeria within the period, almost $7 went to meeting external debt obligations — a reflection of the country’s heavy debt service burden amid efforts to stabilise reserves and manage foreign exchange liquidity.
Monthly data reveal wide fluctuations, underscoring the uneven structure of Nigeria’s external debt profile. In January 2025, the country spent $540.67 million on debt servicing, dropping to $276.73 million in February before soaring to $632.36 million in March — more than double the $276.17 million recorded in March 2024.
April remained elevated at $557.79 million, but payments fell sharply to $230.92 million in May, compared with $854.37 million a year earlier. June saw a modest rise to $143.39 million, nearly triple the $50.82 million recorded in June 2024, while July’s payments slid to $179.95 million, down two-thirds from $542.5 million in July 2024. By August, disbursements recovered to $302.3 million, marginally above the $279.95 million of August last year.
The erratic month-on-month movement highlights the volatile nature of Nigeria’s external obligations, which are often tied to specific repayment schedules on multilateral, bilateral, and commercial loans.
Analysts say the sustained dominance of debt service in Nigeria’s foreign payments poses fiscal and macroeconomic challenges. It places pressure on the nation’s foreign reserves, limits access to foreign exchange for essential imports, and reduces flexibility in managing external obligations.
Despite the high outflows, Nigeria’s external reserves have shown a notable rebound, surpassing the $42 billion mark — the highest in more than six years. CBN data attribute the recovery to improved crude oil output and increased oil receipts, even as global oil prices have remained below $70 per barrel, beneath the 2025 budget benchmark of $75 per barrel.
Oil earnings still account for about 90 per cent of Nigeria’s foreign exchange inflows. The improvement in reserves offers a cushion for short-term stability, but economists warn that reducing debt dependency and diversifying export revenue remain critical to ensuring long-term sustainability.
