Dr. Biodun Adedipe, a development-focused economist, has expressed that he is unfazed by the external debt servicing figures for 2024, emphasizing instead the importance of effectively utilizing external borrowings to execute projects.
He shared these insights during a ‘Talknomics’ program on NairametricsTV, hosted by Ugo Obi-Chukwu, CEO of Nairametrics, titled “CBN and the Naira: The Reasons Behind FX Interventions.”
When asked about his concerns regarding Nigeria’s rising external debt obligations, which reached $45.78 billion in 2024, Dr. Adedipe responded:
“From my perspective, I am not overly worried about debt. Debt is crucial for infrastructure development. It is not solely about borrowing; it is about how we allocate the borrowed funds.”
He drew comparisons with advanced economies, such as the United States and countries in East Asia, stating, “None of the advanced nations achieved world-class infrastructure without incurring debt.”
Dr. Adedipe highlighted a critical gap in Nigeria, stressing the need to ensure value for money by effectively executing projects funded by borrowed capital.
He concluded by asserting, “The focus for Nigeria should be on value for money. If we must borrow at all, let us borrow to fund projects.”
Rise in external debt service obligations
Nigeria’s external debt experienced a substantial increase of 83.89%, rising from N38.22 trillion ($42.50 billion) in 2023 to N70.29 trillion ($45.78 billion) in 2024.
- This significant growth was primarily driven by new external borrowings and the depreciation of the naira, which elevated the naira equivalent of dollar-denominated debt.
On a quarter-on-quarter basis, external debt rose by N1.4 trillion, increasing from N68.89 trillion ($43.03 billion) at the end of September 2024 to N70.29 trillion ($45.78 billion) in December 2024.
- This quarterly increase was attributed to additional foreign loans secured in the last three months of the year, along with the ongoing depreciation of the naira against major international currencies.
Nigeria’s domestic debt in 2024
Nigeria’s domestic debt experienced significant growth, rising by 25.77% from N59.12 trillion ($65.73 billion) in 2023 to N74.38 trillion ($48.44 billion) in 2024.
- The Federal Government accounted for most of this increase, with its debt climbing from N53.26 trillion to N70.41 trillion, marking a growth of 32.19%.
- In contrast, domestic debt owed by states and the Federal Capital Territory (FCT) decreased from N4.21 trillion to N3.97 trillion, reflecting a 5.69% decline.