Every naira spent on debt service is a naira lost to education, healthcare, and food security.
The World Bank’s latest International Debt Report paints a stark picture: between 2022 and 2024, developing countries paid $741 billion more in debt service than they received in new financing — the worst imbalance in half a century.
For Nigeria, this global crisis translates into a concrete and alarming reality.
According to the World Bank’s Online Media Briefing Centre, debt outflows marked the most significant gap in at least 50 years.
Despite these heavy outflows, most countries experienced some relief in 2024 as interest rates peaked and international bond markets reopened.
This allowed many nations to stave off default through debt restructuring, with developing countries collectively restructuring $90 billion in external debt, the highest level since 2010.
Bond investors also provided significant support, injecting $80 billion in new financing, more than they received in repayments and interest, enabling several countries to complete multi‑billion‑dollar bond issuances.
However, this financing came at a steep cost: interest rates averaged around 10 per cent, nearly double pre‑2020 levels.
Indermit Gill, World Bank Group Chief Economist and Senior Vice‑President for Development Economics, cautioned that while global financial conditions may be improving, developing countries remain at risk.
“Their debt build‑up is continuing, sometimes in new and pernicious ways. Policymakers everywhere should make the most of the breathing room that exists today to put their fiscal houses in order instead of rushing back into external debt markets,” Gill stated.
The report noted that the external debt of low‑ and middle‑income countries rose to a historic $8.9 trillion in 2024.
Additionally, 78 mainly low‑income countries eligible to borrow from the World Bank’s International Development Association (IDA) owed a record $1.2 trillion.
Average interest rates on newly contracted public debt reached a 24‑year high from official creditors and a 17‑year high from private creditors.
Collectively, these nations spent a record $415 billion on interest payments alone — funds that could otherwise have supported education, healthcare, and infrastructure.
The human cost of rising debt burdens is severe. In the most heavily indebted countries, one in two people cannot afford the minimum daily diet required for long‑term health.
Access to low‑cost financing became harder in 2024, except through multilateral development banks like the World Bank, which remained the single‑largest financier of IDA‑eligible countries.
The Bank provided $18.3 billion in new financing and disbursed a record $7.5 billion in grants, exceeding what it received in repayments.
Meanwhile, official bilateral creditors — mostly governments and government‑related entities — retreated after participating in restructurings that cut long‑term external debt by as much as 70 per cent in some countries.
In 2024, bilateral creditors received $8.8 billion in repayments, more than they disbursed in new financing. With low‑cost options dwindling, many developing countries turned inward, relying on domestic banks and financial institutions.
Of 86 countries with available data, more than half recorded faster growth in domestic government debt than in external debt.
Haishan Fu, World Bank Group Chief Statistician and Director of the Development Data Group, described this trend as a mixed achievement:
“It shows that local capital markets are evolving. But heavy domestic borrowing can spur banks to load up on government bonds when they should be lending to the private sector.
“Domestic debt also comes with shorter maturities, raising refinancing costs. Governments should be careful not to overdo it,” Fu said.
The report further revealed that in heavily indebted countries where external debt exceeds 200 per cent of export revenue, an average of 56 per cent of the population cannot afford a minimum daily diet.
Among 18 IDA‑eligible countries, nearly two‑thirds of the population face this reality.
The National Bureau of Statistics (NBS)reports that Nigeria’s public debt stock — comprising external and domestic debt — stood at ₦121.67 trillion ($91.46 billion) in Q1 2024, up from ₦97.34 trillion ($108.23 billion) in Q4 2023, a quarter‑on‑quarter growth rate of 24.99%.
- External debt: ₦56.02 trillion ($42.12 billion)
- Domestic debt: ₦65.65 trillion ($49.35 billion)
- Debt composition: External debt accounted for 46.05%, while domestic debt made up 53.95% of total public debt.
Lagos State recorded the highest domestic debt in Q1 2024 at ₦929.41 billion, followed by Delta with ₦334.90 billion. Jigawa had the lowest at ₦2.07 billion, followed by Ondo at ₦16.40 billion.
Fiscal Strain
Rising global interest rates — averaging 10% — mean Nigeria is paying far more to borrow, squeezing funds that could have supported education, healthcare, and infrastructure.
Implications for Nigeria
- Debt Sustainability Risks: With external debt at $91.46 billion, Nigeria is highly vulnerable to global interest rate shocks.
- Human Cost: The World Bank warns that in heavily indebted countries, 1 in 2 people cannot afford a minimum daily diet. Nigeria, already grappling with food inflation and poverty, risks sliding deeper into this trap.
- Shift to Domestic Borrowing: Nigeria is increasingly turning to local banks for financing. While this reflects evolving capital markets, it risks crowding out private sector lending and raising refinancing costs.
- Policy Challenge: The World Bank urges countries to use today’s “breathing room” to restructure and stabilise fiscal systems rather than rushing back into costly external debt markets. For Nigeria, this means prioritising debt management reforms and revenue mobilisation.
The Digger News Verdict
The latest World Bank report is not just another set of statistics — it is a wake‑up call for Nigeria’s policymakers and citizens.
The numbers show Nigeria firmly caught in the global debt storm, with $91.46 billion in external obligations and rising servicing costs. The implications are profound: every naira spent on debt service is a naira not spent on schools, hospitals, or food security.
Nigeria’s debt story is no longer abstract — it is a concrete crisis with direct human consequences.
