There is something strange happening in Nigeria’s budget office. On paper, the country is working. Taxes are collected, oil receipts are logged, customs fees are paid—money flows in every single month. But there appears to be a leak in the bucket. It is a leak so massive that even when the government collects revenue, it can’t even breathe before the money is gone.
In January 2024, Nigeria’s federal government brought in about 449.7 billion naira in retained revenue. In that same month, it turned around and paid 755.9 billion naira just to service debt. This was not a one-off or a sudden emergency. It has become a system. Money enters, and a huge chunk exits immediately.
By 2026, projections suggest debt servicing alone will sit between 15.5 and 15.9 trillion naira, roughly half of what Nigeria expects to earn. Nigeria is not alone in this pattern. According to reports, just six countries hold half of Africa’s external debt: South Africa, Egypt, Nigeria, Morocco, Mozambique, and Sudan.
The question is: How do countries with immense land, minerals, gas, and human capital end up spending their future to pay for their past?
1. The Colonial Blueprint: Debt as an Imperial Strategy
To understand the present, we must look at the origin. Long before Nigeria existed as a sovereign state, the British colonial administration was borrowing in its name. In the early 1920s, millions of pounds were raised from London markets to build railways and ports.
On paper, this looked like development. In reality, it was designed for the Empire, not the colony. Rail lines didn’t connect villages to cities; they connected mines to ports and plantations to harbors. They were built to move raw materials to ships bound for Europe. The loans paid for the infrastructure, and the colony paid the interest.
By the 1950s, Nigeria was already carrying tens of millions of pounds in debt. Independence arrived with ceremonies, but also with an inherited balance sheet. This script was mirrored across the continent:
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Egypt: In the 1870s, European banks lent so aggressively that half of the government’s revenue went to debt. When Egypt couldn’t pay, British troops invaded in 1882, an occupation that lasted 70 years.
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Tunisia: Followed the same path of debt crisis, foreign financial control, and military takeover.
Debt was never just economic; it was an imperial strategy.
2. The Post-Independence Loop: Cold War and Structural Adjustment
After independence, the borrowing didn’t stop—it simply changed uniforms. New governments turned to the World Bank, the IMF, and Cold War allies. In Angola, years of civil war were financed with arms-linked debt. In Egypt, borrowing surged after the 1979 peace deal with Israel. Africa became a chessboard, and the pieces—the roads, the weapons, the regimes—were all financed on credit.
By the 1980s, the bill arrived. Nigeria entered severe debt distress, and in 1986, the IMF stepped in with Structural Adjustment Programs (SAPs). The formula was harsh: cut spending, devalue the currency, and privatize assets. While the loans kept governments alive, the austerity pushed ordinary people underwater.
3. The Great Escape and the Return to the Trap
By the mid-2000s, Nigeria owed $36 billion, while its revenue was barely a quarter of that. In 2005, President Olusegun Obasanjo performed a radical maneuver. Nigeria paid $12 billion upfront to the Paris Club to wipe out over $30 billion in debt.
Almost overnight, Nigeria was free. Debt-to-GDP collapsed into single digits. For the first time in a generation, the country had room to imagine a future. But the celebration masked a lingering danger: while external debt vanished, domestic debt did not. Worse, the underlying structures—low tax collection, corruption, and oil dependency—remained unchanged.
By 2011, domestic debt had climbed to 5 trillion naira. The door was open again. By 2015, total debt was 12.6 trillion naira. By late 2024, it hit 142.3 trillion naira, and by mid-2025, it reached 152.4 trillion naira. This is not growth; it is an economy surviving on borrowing.
4. The Three Waves of the Modern Crisis
Three specific events accelerated this dive back into debt:
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The Oil Collapse (2014): When oil prices crashed, government income thinned. As the naira weakened, foreign debt—which must be repaid in dollars—became exponentially heavier.
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The Infrastructure Temptation: The logic was “borrow now, build big, grow later.” However, borrowing only works when projects produce returns and are protected from leaks. Instead, money was lost to delays and inflated contracts.
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The Pandemic: COVID-19 forced a global scramble for emergency financing. Nigeria joined the queue, adding future interest to an already buckling system.
By 2024, Nigeria’s debt-service-to-revenue ratio hit 162%. The state is now a household spending half its salary on interest before even buying food.
5. Who are the Creditors?
Nigeria’s debt is owed to three main camps:
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Multilateral Lenders: The World Bank, IMF, and AFDB hold about $22.43 billion (nearly half of external debt).
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Commercial Lenders: Roughly $17.51 billion is held in Eurobonds. These are “hard money” promises with high interest rates set in Washington, not Abuja.
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Bilateral Creditors: Led by China’s Exim Bank at $4.9 billion.
Often, Nigeria “refinances” this debt—borrowing new money to pay off old bonds. It is borrowing to escape borrowing by borrowing again.
6. The Leaking Bucket: Corruption and Illicit Flows
There is a hole in Africa’s finances. Every year, the continent loses up to $100 billion through illicit financial flows—tax evasion, trade misinvoicing, and theft. This is more than the continent receives in foreign aid.
In Nigeria, investigators found that between 2019 and 2023, over 1.4 billion naira was transferred from the Ministry of Humanitarian Affairs—the agency meant to help the poor—into private bank accounts. These transactions were hidden under vague descriptions like “logistic” or “budget defense.”
When money for roads and hospitals is stolen, and the debt bill comes due, the public pays twice: once through the debt they inherit, and again through the services they never receive.
7. The Human Cost: Debt is Not a Spreadsheet
On paper, Nigeria’s debt equals roughly 700,000 naira for every man, woman, and child. In reality, it shows up as:
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Angola: A third of the population lives in poverty while oil revenue goes to creditors.
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South Africa: The state spends more on debt service (420 billion rand) than on healthcare (300 billion rand). Debt shows up as an overcrowded classroom or an unfilled teaching position.
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Egypt: To meet loan conditions, subsidies on bread were slashed. Debt dictates policy, and policy determines who eats.
When fuel subsidies were removed in Nigeria, the promised 7 trillion naira in savings was swallowed by debt servicing. The public got higher prices; the creditors got paid.
The debt trap is not a collection of numbers; it is a child whose growth is stunted because protein is too expensive. It is a hospital without medicine. African governments know this is unsustainable, yet the cycle continues. The question remains: when will they try something different?