The total debt owed is N31.98tn ($41.5bn) to foreign entities, which included loan from the financial agencies, Eurobonds, and syndicated loans, among others.

A record of the data showed that Nigeria’s external debt spans across multilateral loans owed by the International Monetary Funds ($2.8bn), International Development Association ($14bn), African Development Bank ($1.6bn), Int’l Bank for Reconstruction and Devpt ($488m).

Also bilateral loans of about $4.8bn owed to the Exim Bank of China and $563m owed to the Agence Francaise Development, a $15bn Eurobond and syndicated loans worth $300m.

In addition, Nigeria’s external debt totalled is $41.5bn (N31.98tn) as of September 30, 2023, the last debt profile data published by the DMO.

According to the DMO, the Central Bank of Nigeria’s official exchange rate of $1 to N768.76 as of September 30, 2023, was used in converting external debt to naira.

Thus, Naira devaluation in the last six months, made Nigeria’s external debt to increased significantly.

Much of the Naira damage began around the early exchanges of 2024 , with the apex bank accusing currency speculators of fuelling the free fall of the local currency.

Between Jan 1, 2024, and the end  of trading on February 29, 2024, the naira has fallen from 891/$ to 1,609/$, representing a decline of 80.58 per cent.

In order words, between the September 30 exchange rate of 768/$ (which captures the rate used in the DMO’s calculation) and the current rate of 1,609/$ as of Thursday, the naira has depreciated by over 109 per cent, the implication being that Nigeria’s external debt has increased by over 109 per cent between the period when the DMO published the last debt stock information and February 2024.

The significant rise (in naira terms) of Nigeria’s foreign debt comes amid plans by the Federal Government to raise more funding through loans.

During the World bank/International Monetary Fund Annual meeting in Marrakech, Morocco, last year, Wale Edun Minister of Finance and Coordinating Minister of the Economy, acknowledged that the government was in an agreement with the world Bank for $$1.5bn budget support loan.

The minister said the new World Bank loan would be used to finance development, revealing that the facility would be disbursed to Nigeria very soon.

He stated that, “On the talks with the World Bank on $1.5bn budget support that is correct. The World Bank is the number one multilateral development bank helping developing countries or funding developing countries, projects and programmes, and sectors.

“It has free money through the International Development Association. It is for the poorer countries and right now, I think we qualify as one of the countries that can borrow from the normal window of the World Bank funding, but also some concessionary IDA funding; and that means that effectively, the interest rate will be zero.

Nigeria’s incessant borrowing comes despite warnings by experts and global lenders against the dangers of over-reliance on debt for development needs. These include the International Monetary Fund, which projected that “the Nigerian government may spend nearly 100 per cent of its revenue on debt servicing by 2026”.

The World Bank also stressed that the country’s debt, while seemingly sustainable, is “vulnerable and costly”.

The Nigerian Economic Summit Group, a body of private sector leaders, warned against what it saw as the prospect of creating “a debt burden for future governments”.

During the Annual Market Access Country  Debt Sustainability Analysis (2022), which included projections for 2023 through 2025, the Debt Management Office said that its Medium-Term Debt Management Strategy targets 70:30 domestic and external debt composition. As of September 2023, Nigeria had already exceeded that projection by 6.3 per cent.

With the significant decrease of the local currency recorded between September 2023 and February 2024, experts had predicted that the threshold for DMO’s external-local debt was expected to broaden.

Wakadaily learnt that, the president of the Lagos Chambers of Commerce, Gabriel Idahosa stressed that, it would be ‘impossible’ for Nigeria to attain it’s 70:30 public-external debt ratio due to the free fall of the naira.

Idahosa noted that ,“Nobody, not even the DMO, could have predicted the drop in the value of the naira. Whatever they do in their next report should reflect reality.”

The DMO, in its MTDS, also advised the prioritisation of concessional and semi-concessional funding from multilateral and bilateral sources over market financing in the case of external borrowing.

Though, Experts argued that due to the fall the naira had taken recently, the Federal Government’s plan to spend about N9tn for debt servicing may no longer be feasible unless the government was able to overshoot its revenue projections, which seemed unlikely given a recent admission by the Director-General of the Budget Office of the Federation, Ben Akabueze

Akabueze attributed the trend of deficit budgets in recent years to low revenues.

He said, “The key is to generate enough revenue to meet our needs. We are not currently there.”

Dele Oye,the president of the Nigeria Association of Chambers of Commerce Industry, Mines and Agriculture expresses concern that go over the damage the forex crisis had on organized businesses, the the government’s budget would become one of the casualties of the continued naira devaluation.

Oye said, “Even the government, this exchange rate situation has made nonsense of their budget because all the things they want to do have already run differently from the figures projected.

“We all know that stability is an important element of business. The currency issue is a major catalyst behind inflation. It affects planning. It affects production. Businesses are afraid to produce because when they do, they cannot recoup to be able to restock. So, if they sell their products at the current rate, they won’t be able to restock. So, what that means is that almost all economic activities will come to a standstill.”

In his reaction, Nigeria’s consultant to the ECOWAS Common Investment Market, Jonathan Aremu, queried the metric through which the Federal Government concluded to peg the exchange rate for its 2024 budget at 800/$.

Aremu stressed that, the CBN’s decision to pump more naira into the economy has largely been responsible for the decrease of the currency.

He said, “I believe very strongly that if the volume of physical naira that is available is not much, then the exchange rate will not rise the way it has. So, the government that is pumping naira into the economy should be able to account for the fallen currency.

“If there is an increase in the naira that is available and there is no increase in the dollar from exports, then what do we expect? I think the best thing they can do is to control the increasing naira that is available, and I believe the Central Bank has the tools to do that. It is a quantity theory of money approach.”

He further explained  that with the continued devaluation of the local currency, Nigeria’s external debt would continue to increase in naira terms, a development which would put a strain on an already ailing economy.

Aremu urged the government to emphasise creating an enabling environment for a robust productive sector that would set the stage for increased non-oil exports and less reliance on imported products.

He warned that if quality measures are not put in place, Nigeria will find itself holding the short end of the stick  vis-à-vis the African Continental Free Trade Agreement, as other countries with better production environments would outdo Nigeria with products that would have a more competitive edge.