Nigeria’s total debt servicing rose by N2.98tn year-on-year to N15.81tn in 2025, driven largely by a sharp increase in domestic interest payments and sustained external obligations, data from the Debt Management Office has shown.

An analysis of the DMO’s actual debt service reports showed that total payments increased from N12.83tn in 2024 to N15.81tn in 2025, representing a 23.2 per cent rise within the period.

The increase was driven primarily by domestic debt servicing, which climbed from N5.87tn in 2024 to N8.61tn in 2025, marking a N2.74tn increase or about 46.7 per cent year-on-year.

This means domestic debt accounted for approximately 54.5 per cent of total debt servicing in 2025, up from about 45.8 per cent in 2024, highlighting a clear shift in the structure of the country’s debt burden towards local obligations.

External debt servicing, on the other hand, rose from $4.66bn in 2024 to $5.15bn in 2025, representing an increase of $490m or 10.5 per cent.

Using the Central Bank of Nigeria’s official exchange rates adopted by the DMO, external debt service amounted to about N7.15tn in 2024 at N1,535.3176 per dollar and N7.39tn in 2025 at N1,435.2571 per dollar. This translates to a N240bn increase in naira terms, equivalent to about 3.4 per cent year-on-year.

Despite the rise, the share of external debt service in total obligations declined from roughly 55.8 per cent in 2024 to 45.5 per cent in 2025, reflecting the faster growth of domestic debt costs.

A deeper breakdown of the domestic debt service profile showed that interest payments accounted for the overwhelming portion of obligations, rising from N5.60tn in 2024 to N8.24tn in 2025, an increase of N2.64tn or 47.1 per cent.

Interest payments alone represented about 95.7 per cent of total domestic debt service in 2025, compared to about 95.4 per cent in 2024, indicating that the burden remains heavily skewed towards servicing interest rather than repaying principal.

Within the interest component, Federal Government bonds continued to dominate, with payments rising from N4.69tn in 2024 to N5.35tn in 2025, reflecting an increase of N663.38bn or 14.1 per cent.

However, the most significant growth was recorded in Nigerian Treasury Bills, where interest payments surged from N747.15bn in 2024 to N2.55tn in 2025. This represents an increase of N1.80tn or about 241 per cent, indicating a substantial rise in short-term borrowing costs and a possible shift towards increased reliance on Treasury bill issuances.

The share of Treasury bills in total domestic interest payments rose sharply to about 31 per cent in 2025 from just 13 per cent in 2024, while the share of FGN bonds declined from about 83.7 per cent to roughly 65 per cent, even though bonds remained the largest single cost component.

Other instruments accounted for smaller proportions but still showed notable changes. Interest on FGN Savings Bonds increased from N6.38bn in 2024 to N13.59bn in 2025, representing a 113 per cent rise, although its share remained marginal at less than 0.2 per cent of total domestic interest payments.

Sukuk bond rentals rose slightly from N158.43bn in 2024 to N171.73bn in 2025, an increase of about 8.4 per cent, while Green Bond payments increased from N2.18bn to N6.67bn, representing a jump of over 206 per cent, albeit from a low base.

On the principal side, domestic debt repayments increased from N265.86bn in 2024 to N370.93bn in 2025, marking a N105.07bn rise or about 39.5 per cent.

Principal repayments accounted for just 4.3 per cent of total domestic debt service in 2025, reinforcing the dominance of interest obligations in Nigeria’s domestic debt profile.

Monthly trends showed that domestic debt service was unevenly distributed, with several months recording exceptionally high payments due to bond coupon settlements and Treasury bill maturities. For instance, total domestic debt service exceeded N1tn in March 2025, reflecting peak payment cycles associated with large instruments.

On the external side, total debt service in 2025 amounted to $5.15bn, comprising $3.06bn in principal repayments, $2.03bn in interest payments, and $59.21m in other charges.

Principal repayments accounted for approximately 59.4 per cent of total external debt service in 2025, while interest payments made up about 39.5 per cent, indicating a more balanced structure compared to domestic debt, where interest dominates.

A breakdown by creditor category showed that commercial debt accounted for the largest share at $2.55bn, representing about 49.6 per cent of total external debt service in 2025.

Within this category, Eurobond repayments alone stood at $2.49bn, accounting for roughly 48.4 per cent of total external debt service and over 97 per cent of commercial debt payments, making it the single largest external obligation.

Multilateral creditors accounted for $1.996bn, representing about 38.8 per cent of total external debt service. Payment to the International Development Association of the World Bank was $769.24m, while the International Monetary Fund accounted for $816.29m, largely reflecting principal repayments.

Other multilateral obligations included payments to the African Development Bank, African Development Fund, Islamic Development Bank, International Fund for Agricultural Development, and the European Investment Bank.

Bilateral creditors accounted for $599.95m, representing about 11.6 per cent of total external debt service. The Exim Bank of China dominated this segment with $475.77m, accounting for nearly 79 per cent of bilateral payments.

Other bilateral creditors included the Agence Française de Développement, Exim Bank of India, Japan International Cooperation Agency, Germany’s KfW, and the China Development Bank.

In comparison, total external debt service in 2024 stood at $4.66bn, with significant contributions from multilateral and commercial creditors, though at lower levels than recorded in 2025.

The increase in external debt service between the two years was driven mainly by higher principal repayments, particularly on commercial debt instruments such as Eurobonds, alongside sustained interest obligations.

Overall, the data show that Nigeria’s debt service burden is becoming increasingly dominated by domestic obligations, particularly interest payments on short- and long-term securities, while external debt continues to exert pressure through large commercial repayments.

The PUNCH earlier reported that debt servicing in Nigeria outpaced capital expenditure by N3.9tn between 2024 and 2025, highlighting growing fiscal pressures on the federal budget.

Also, The PUNCH recently reported that the Federal Government increased its borrowing plan for 2026 to N29.20tn following an expansion in the proposed budget size.

The figure was an increase of N11.31tn when compared with the earlier N17.89tn borrowing projection contained in the 2026 Abridged Budget Call Circular issued by the Federal Ministry of Budget and Economic Planning.

The Programme Manager of the Sustainable Nigeria Programme at Heinrich Böll Stiftung, Mr Ikenna Ofoegbu, earlier warned about the high cost of borrowing in the economy. According to him, revenue is being swallowed by debt payments.

“Our debt servicing is about 60 per cent to 70 per cent. It has come down from about 80 per cent to 90 per cent. So now we’re about 60 per cent to 70 per cent,” he said.

He criticised the lack of transparency. “Unfortunately, we’re not dealing with the kind of leaders that we can trust, whatever they say or their intentions. We cannot trust the system. We cannot trust our politicians,” he said. “I don’t know the last time we saw all these reports publicly.”

The Executive Director of Centre for Inclusive Social Development, Mr Folahan Johnson, recently said the human impact of debt should not be ignored. “The true cost of debts is the out-of-school child, the out-of-school girl,” he said. “The true cost of debts is that a woman who has to do business loses her life because of lack of access to basic maternal health care.”