Nigeria’s Government Debt, Others Highest in Africa as World Bank Releases New List

• Many African nations have seen a significant rise in government debt due to ongoing budget deficits, currency depreciation, interest rate hikes, and the impact of the COVID-19 pandemic
• While debt can support economic growth, its rapid increase raises concerns about long-term stability, public welfare, and the ability of governments to manage new debt
• If not controlled, rising debt levels could lead to a cycle of default, austerity, and underdevelopment, with countries like Nigeria, Ghana, Zambia, Kenya, and Egypt experiencing some of the largest increases in debt

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Several problems, such as ongoing budget deficits, currency depreciation, rising interest rates, global economic shocks, and the aftermath of the COVID-19 pandemic, have forced African countries to take out more loans to compensate for revenue shortfalls.

The amount of general government debt has varied greatly in several African nations in recent years.

Debt can be a necessary tool for financing progress, but its rapid annual growth raises concerns about economic growth, long-term viability, and public welfare.

While Nigeria's debt service-to-revenue ratio has skyrocketed in recent years, despite historically low debt-to-GDP ratios, other nations such as Ghana, Zambia, Kenya, and Egypt have seen significant increases in debt.

Business Insider reported that Governments' ability to manage new debt loads declines when they borrow money year after year to finance infrastructure, pay salaries, and settle past debts.

Increases in interest payments are an inevitable consequence of rising debt levels.

Debt repayment takes up a significant portion of the budgets of many African nations, leaving little for infrastructure, healthcare, and education.

Inflationary pressures are often caused by large government borrowing, particularly when central banks are backing it.

Furthermore, currencies with high debt loads are more susceptible to speculative attacks, which lowers purchasing power.

Growing debt levels erode investor confidence, especially when paired with a lack of transparency. This could result in increased risk premiums, decreased foreign direct investment (FDI), and higher financial market volatility.

The aforementioned issue demonstrates that, although debt can be a powerful economic tool if properly managed, the annual rise in total government debt in Africa poses serious challenges.

If left unchecked, mounting debt loads might trigger a vicious cycle of default, austerity, and underdevelopment.

According to the World Bank's Africa Pulse report, these ten African nations saw the largest increases in general government debt (measured by the debt-to-GDP ratio) between 2024 and 2025.

Institutions Nigerian government owes $43 billion

Legit.ng reported that Nigeria owes over $42 billion to foreign institutions and countries as at September 30, 2024.

According to the data from the Debt Management Office (DMO), this sum represents unpaid debts accumulated from both present and past government administrations.

Recall that the DMO clarified that President Bola Tinubu’s inherited debt was N87 trillion, not N21 trillion, as some media reports claimed.

Source: Legit.ng