Asset Managers Urge Fiscal Discipline as Nigeria's Debt Hits N159 Trillion
Analysts at Cowry Asset Management Limited have issued a stark warning, calling for stronger fiscal discipline and an aggressive push to expand public revenues. They caution that Nigeria's escalating debt profile could become a significant constraint on economic growth if not managed with care. The firm underscores that improving revenue mobilisation through a broader tax base, enhanced compliance, and increased non-oil earnings is critical to maintaining fiscal stability. This must be paired with more efficient and targeted public spending to avert potential crises.
Debt Figures and Hidden Liabilities
Nigeria's total public debt surged to N159.28 trillion, equivalent to approximately $110.98 billion, as of December 31, 2025. This marks a 10.1 per cent increase from the N144.67 trillion recorded at the end of 2024. On a quarterly basis, the debt stock also rose by four per cent from N153.3 trillion as of September 2025, indicating a steady upward trajectory in government borrowing. Beyond these headline figures, Cowry argues that the official debt stock does not fully capture the country's total fiscal exposure. Quasi-fiscal liabilities, including obligations from the Asset Management Corporation of Nigeria (AMCON), power sector debts, and contractor arrears, remain excluded, suggesting a broader and more complex debt burden.
Debt Structure and Servicing Costs
An analysis of the debt structure reveals a near-even split between domestic and external obligations. Domestic debt accounts for N84.85 trillion, representing 53.27 per cent of the total, largely driven by Federal Government borrowings. Although relatively accessible, this form of financing has become increasingly costly amid elevated interest rates. External debt stood at N74.43 trillion, or 46.73 per cent, comprising multilateral, bilateral, and commercial loans. While concessional facilities from institutions such as the World Bank and the African Development Bank offer some relief through lower interest rates, commercial instruments like Eurobonds entail higher costs and expose Nigeria to global financial market risks. Exchange rate volatility continues to amplify the naira value of external obligations, further intensifying repayment pressures.
Sustainability Concerns and Revenue Challenges
Despite a debt-to-GDP ratio of about 30.8 per cent, which remains below the 60 per cent threshold outlined in the Medium-Term Debt Strategy, Cowry cautions that this metric alone does not adequately capture debt sustainability risks. The more critical concern lies in the cost of servicing debt relative to government revenues. In 2025, domestic debt servicing rose to approximately N8.61 trillion, driven by high interest rates and frequent refinancing of short-term instruments at elevated yields. Federal Government bonds accounted for N5.49 trillion of this amount, while treasury bills contributed N2.55 trillion, with other instruments such as Sukuk, promissory notes, savings bonds, and green bonds making up the remainder. External debt servicing was estimated at $5.15 billion, adding further strain on public finances.
Cowry notes that while recent reforms in revenue generation and the foreign exchange market signal progress, sustaining these gains will be decisive in shaping Nigeria's fiscal outlook. The analysts stress that striking a balance between prudent borrowing, stronger revenue inflows, and disciplined expenditure will ultimately determine whether Nigeria's debt remains sustainable. They emphasise that without immediate action to boost revenues and curb unnecessary spending, the country risks facing severe economic constraints in the near future.
