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How Foreign Exchange Crisis Drives Up Nigeria’s Debt Profile Under Tinubu, Drains Country’s Revenue

THE volatile exchange rate of Nigeria is not helping it manage its scarce resources, a analysis has shown.

While the country continues to rely heavily on loans, disparities in foreign exchange means that even without borrowing more, Nigeria depletes its scarce revenue at a high rate, in an event of repaying loans and also for debt servicing.

Nigeria is Africa’s most populous nation, overtime the country has battled with different issues ranging from poor revenue to Mal administration.


To meet its fiscal needs, different administrations have relied on loans, borrowing from different sources.

Alongside the penchant for loan comes debt servicing, the higher the loan, the higher the debt servicing. However, another shark lurks in the corner, foreign exchange. One of the challenges faced by the country is its unstable currency.

As of the time of this report, in the parallel market, the Dollar to Naira rate stands at N1470 to one dollar.

As of December 2022, the external debt of the country was calculated using an exchange rate of N448 to one dollar, the total external debt stood at $41.694 billion , using the exchange rate deployed, the naira equivalent was N18.702 trillion.

As of December 2023, the exchange rate used by the government stood at N899 to $1, so when the country’s external debt was $42.495 billion, the naira equivalent stood at N38.219 trillion.

Assuming the country’s exchange rate still was N448 per dollar that it stood in 2022, the 2023 debt profile would have been N19.0377 trillion. That is N448 multiplied by 2023 external debt of $42.495 billion.

As of the end of December 2023, the country was repaying N38.219 trillion when it could have been repaying N19.077 trillion.

Exchange rate fluctuations put an extra-burden of N19 trillion on the country.

As of the first quarter of 2024, the external debt portfolio of the country dropped to $42.115 billion but regardless of this, the exchange rate used stood at N1330 per dollar, meaning that the naira equivalent stood at N56.024 trillion.

This is despite the fact that the country did not take on more external debts between January and March 2024.

Assuming, the exchange rate used in December, 2023 (N899/dollar) was deployed to calculate the external debt, the debt portfolio would only have stood at N37.8 trillion.

The implication of the exchange rate fluctuations is that an extra N18.2 trillion burden was added on the country’s debt profile due to foreign exchange fluctuations.

The implications of the country’s increasing debt profile depends largely on its debt servicing portfolio.

As of the last quarter of 2022 (October to December) when the exchange rate value of $1 to N448 was used, the external debt servicing value for those three months stood at $312.2 million.

The figure however jumped to $943 million in the last quarter of 2023, when $1/899 was used as exchange rate.

In the first quarter of 2024, the country spent $1.119 billion on external debt servicing with an exchange rate of N1330 per dollar.

Increasing Public Debt profile and the consequences of spending largely on debt servicing has meant that Nigeria fails to attend fully to its myriad of developmental problems.

For instance, Nigeria suffers from poor health infrastructure, poor access roads, water , unemployment among others.

SaharaReporters’ review shows that in 2024, the country plans to service debts with N8.2 trillion, N10 trillion in 2025 and another N11 trillion in 2026.

In contrast, the country plans to spend in total N27 trillion in 2024, N27 trillion in 2025 and another N29 trillion in 2026.

In total, a sum of N83 trillion is planned to be spent as expenditure within the period under review.

By implication, Nigeria plans to spend 34% of its expenditure on debt servicing or N1.3 out of every four naira it plans to earn in next three years on debt servicing.

Our earlier report also A SaharaReporters analysis has shown that the federal government of Nigeria spent 61% of its inflows (revenue) on debt servicing between 2015 and the first three months of 2023.

Review shows that the total debt service figure stood at N19.8 trillion in the eight years and three months under review while revenue accrued was N32.1 trillion.

The country has continued to lament poor revenue, although experts say the expenditure on debt servicing and a reduction in public debt would have helped the country achieve some of its goals.

There has also been controversy on the management of Nigeria’s loan portfolio, for instance the Socio-Economic Rights and Accountability Project (SERAP).

SERAP urged Tinubu “to direct appropriate ministries, departments and agencies to provide our organisation with copies of the loan agreements obtained by the governments of former Presidents Olusegun Obasanjo, Umaru Yar’Adua, Goodluck Jonathan and Muhammadu Buhari.”

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