The latest report on Nigeria’s public debt has raised concerns among some financial analysts, despite a slower growth in the debt burden. The Debt Management Office (DMO) reported that Nigeria’s public debt rose to N87.91 trillion or $114.25 billion at the end of the third quarter of 2023 (Q3’23), representing a 0.6 percent increase from the previous quarter's figure of N87.38 trillion.

The debt figures indicate a shift in the government's focus towards domestic borrowing while reducing foreign borrowing. Some financial analysts have expressed skepticism about this shift, suggesting that it may not yield positive results for the economy.

Okiki Oladipo, a Senior Analyst at Parthian Partners, noted that the sustained increase in interest rates across advanced economies has made local borrowing more affordable. This explains the significant portion of domestic debt in the public debt as reported in Q3 2023. He also highlighted the impact of the repayment of a $500 million Eurobond in July on the decline in foreign currency debt.

Analyst and Executive Vice Chairman at HIIGHCAP Securities Limited, expressed the view that the economy is reliant on debt to sustain itself and that winding down domestic and foreign debt will be sustainable if the momentum of reforms is maintained.

Prof Uche Uwaleke, President of the Association of Capital Market Academics of Nigeria (ACMAN), expressed concern about the outstanding domestic debt stock being more in FGN bonds, which are not tied to specific projects and account for over 80 percent. He emphasized the importance of future domestic borrowings being used for infrastructure bonds such as Sukuk and Green Bonds, which are connected to self-liquidating projects.

Clifford Egbomeade, an Analyst and Public Relations and Communications Adviser at ID Africa, highlighted the potential positive and negative implications of the increase in domestic debt. He stressed the need for sustained scrutiny and prudent management of debt levels to ensure that borrowing aligns with productive investments and fosters sustainable economic growth while avoiding over-indebtedness.

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