Nigeria’s External Debt Reaches $90.2 Billion in 2025
Nigeria’s net external debt has risen by $7.5 billion, reaching a total of $90.2 billion in 2025. This increase is largely attributed to the rapid growth of foreign investors’ claims on Nigerian assets, which outpaced the country’s foreign investments, as reported by the Central Bank of Nigeria (CBN).
Drivers Behind the Surge in Foreign Debt
The rise in Nigeria’s foreign debt position highlights the expansion of both foreign portfolio and direct investment debt. This uptick has been partially mitigated by a boost in Nigeria’s reserve assets and a rise in foreign investments held by domestic residents.
Key Figures from the CBN Report
The CBN’s International Investment Position Report reveals that Nigeria’s net financial debt escalated from $82.7 billion in 2024 to $90.2 billion in 2025. This figure is derived from $125.6 billion in foreign assets—representing investments held abroad by Nigerian residents—against $215.8 billion in foreign liabilities, which denote foreign investments in domestic assets.
Understanding the IIP vs. Balance of Payments
It is important to distinguish between the balance of payments and the International Investment Position (IIP). The balance of payments tracks the flow of trade and capital transactions over a specific period, while the IIP captures the cumulative inventory of external financial assets and liabilities at a given moment.
Sectoral Insights on Foreign Investments
The increase in Nigeria’s external debt is significantly driven by a $10.1 billion rise in portfolio investment debt, largely due to foreign investments in government debt instruments such as Open Market Operations (OMO) bills. The high yields offered by Nigeria’s elevated interest rate environment have drawn investor interest. Additionally, direct investment debt grew by $6.7 billion year over year, reflecting stronger foreign ownership stakes in local companies, underscoring sustained investor confidence in certain sectors of the economy.
Boost in Nigeria’s Reserve Assets
On the positive front, Nigeria’s reserve assets increased by $5.6 billion, enhancing the country’s external buffers and bolstering its capacity to handle external shocks. An additional $3.3 billion was contributed by growth in direct assets, portfolio assets, and other foreign investments held by Nigerians, further strengthening the overall financial position.
Concerns About Dependency on Foreign Capital
However, the increasing debt profile raises concerns about Nigeria’s growing reliance on foreign capital inflows. While these investments have aided foreign exchange liquidity and alleviated pressure on the naira, the influx of short-term portfolio investments poses risks. A spike in global interest rates or a dip in investor confidence could precipitate sudden capital outflows, jeopardizing the economy.
Calls for Long-term Foreign Direct Investment
Economists emphasize that Nigeria’s external sustainability hinges on attracting more long-term foreign direct investment, boosting non-oil export revenues, and bolstering reserve strength. Although rising oil prices could further enhance export earnings and foreign exchange inflows, analysts advocate for a strategic pivot away from short-term yield-focused capital flows, urging a focus on productive investments that bolster economic capacity and generate sustainable foreign exchange earnings.
