By Okafor Joseph Afam
December 5, 2024

The depreciation of the naira has significantly increased Nigeria’s external debt burden in local currency terms, adding a staggering N30.03 trillion between 2023 and June 2024, a report from the Debt Management Office (DMO) has revealed.

Although the dollar value of Nigeria’s external debt has slightly decreased, the currency’s devaluation has amplified the debt’s impact on the country’s finances when measured in naira.

As of June 1, 2023, Nigeria’s external debt was recorded at $43.16 billion, according to data from the DMO, as reported by PUNCH. At the prevailing exchange rate of N770.38 to the dollar, this translated to N33.25 trillion.

Nigeria’s debt obligations include $1.61 billion to the International Monetary Fund (IMF), accounting for 3.75% of the total external debt, and $16.32 billion to the World Bank. Most of the World Bank’s debt portfolio comprises loans from the International Development Association (IDA), representing 38% of Nigeria’s total external debt.

By June 1, 2024, however, the naira had depreciated sharply by 47.6%, pushing the exchange rate to N1,470.19 per dollar. Consequently, Nigeria’s external debt, though reduced to $42.90 billion, surged in naira terms to N63.07 trillion.

This reflects a staggering 89.7% increase — or N29.82 trillion — in the naira equivalent of the debt within one year. Despite the modest 0.60% decline in the dollar value of Nigeria’s external debt, the local currency’s depreciation has exacerbated the debt burden in naira terms.

For comparison, if the June 2023 exchange rate of N770.38 to the dollar had remained constant, Nigeria’s external debt would have amounted to N33.05 trillion in June 2024. This highlights how naira devaluation added N30.02 trillion to the country’s debt stock over a year.

The report also noted that while the face value of Nigeria’s external debt in dollar terms has remained relatively stable, the sharp depreciation of the naira has caused a steep rise in the naira equivalent.

Furthermore, external debt accounted for 46.96% of Nigeria’s total debt by June 2024, up from 38.05% in the same month the previous year, underscoring the increasing share of foreign obligations in the country’s debt profile.

As Nigeria continues to grapple with currency weakness and rising total debt, the implications of the naira’s depreciation r

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