Nigeria is paying significantly higher interest rates on new foreign loans from private creditors than on financing obtained from international development institutions and foreign governments, according to the World Bank’s latest debt statistics. The International Debt Report 2026, which examines borrowing conditions in 2025, revealed that new public and publicly guaranteed loan commitments from private lenders attracted an average interest rate of 9.6%, compared with 1.9% from official creditors. This means that the interest rate on private borrowing was approximately five times higher. The findings come as Nigeria’s total external debt stock reached $145.02 billion in 2025, raising fresh questions about the cost of servicing foreign loans and the pressure debt repayments place on the economy. Data Topics+1
For many Nigerians, the figures may appear distant from everyday concerns about food prices, transport fares, healthcare and education. However, the cost of borrowing matters because money committed to servicing government debt competes with other demands on public finances. When the government obtains loans at higher interest rates, it may need to allocate more revenue towards repayments over the years. This can make it more difficult to finance infrastructure and essential services unless public revenue grows sufficiently. The World Bank’s findings do not mean that every Nigerian loan carries a 9.6% interest rate. Rather, the comparison relates to the average terms of new public and publicly guaranteed external borrowing commitments obtained from different categories of lenders during 2025.
Nigeria’s fiscal authorities face the challenge of balancing development financing with the growing cost of servicing government debt.
The report also revealed major differences in the repayment periods offered by private and official creditors. Loans from official creditors had an average maturity period of 25 years, with a five-year grace period and an interest rate of 1.9%. Private creditors, by comparison, offered an average maturity period of 12 years, an eight-year grace period and an interest rate of 9.6%. Although the private loans provided a longer initial grace period, their substantially higher interest rates and shorter overall repayment terms could make them more expensive over the life of the loans. The exact cost of each borrowing arrangement depends on its currency, interest structure, repayment schedule and other contractual conditions. These differences underline why the amount a country borrows is only part of the financial picture.
Nigeria’s external debt has grown considerably over the past decade. World Bank figures show that the country’s total external debt stock increased from approximately 83.21 billion in 2015 to 145.02 billion in 2025, a rise of about $61.8 billion. In 2024, the total stood at approximately $135.99 billion, meaning the debt stock increased by 6.6% in the following year. The reported total includes obligations of the public sector, private businesses borrowing without government guarantees, and short-term external debt. Consequently, it should not be interpreted as the Federal Government’s debt alone. Nevertheless, the figures illustrate how Nigeria’s overall financial obligations to foreign creditors have expanded over time.
Foreign exchange conditions, interest rates and borrowing costs influence Nigeria’s ability to manage its external financial obligations.
A closer examination of the debt figures shows that Nigeria owes money to several categories of international creditors, including multilateral development institutions, foreign governments, commercial banks and international bondholders. The World Bank’s International Development Association, which provides concessional financing to eligible countries, remains an important source of development funding. China is also a significant bilateral creditor, alongside countries such as France. Private international creditors, meanwhile, provide financing through commercial lending arrangements and debt securities. Each borrowing source offers different conditions, and those differences can substantially affect repayment costs. Official loans may offer lower interest rates or longer repayment periods, while commercial financing may provide access to funds under terms that reflect investors’ assessment of market risks.
The report also highlighted growing pressure from external debt servicing. In 2025, Nigeria’s external debt service represented approximately 19% of its export earnings, while debt-service payments were equivalent to about 5% of gross national income. Both indicators increased compared with the previous year, even as some measures of the country’s total debt burden improved. For example, external debt as a proportion of exports declined to 212%, while the debt-to-gross-national-income ratio fell to 51%. These contrasting developments demonstrate that a country’s debt position cannot be judged by a single figure. Even when the size of debt becomes more manageable relative to income or exports, the immediate burden of making repayments can remain substantial. World Bank • Channels
Export earnings provide foreign exchange that can help countries meet external debt obligations and finance international trade.
The implications extend beyond government accounting. Nigeria depends on foreign exchange earnings from exports and other international transactions to support imports and meet obligations denominated in foreign currencies. When debt repayments rise, more foreign exchange may be needed to settle existing commitments. Exchange-rate movements can further increase the domestic-currency cost of repayment, particularly when the naira weakens against the currencies in which loans are denominated. For businesses, foreign borrowing can finance expansion and investment, but higher financing costs may reduce profitability or discourage new projects. For government, the challenge is ensuring that borrowed funds produce economic benefits sufficient to justify the repayment obligations they create.
Nigeria’s experience reflects a wider debt challenge confronting developing economies. According to the World Bank, the combined external debt of low- and middle-income countries reached a record 9.4 trillion in 2025, representing an increase of 5.5% from the previous year. Debt-service payments across these countries climbed to approximately 1.4 trillion, marking the fifth consecutive annual increase. Between 2022 and 2025, developing countries collectively paid about 436 billion more in debt service than they received in new financing. World Bank Group Chief Statistician and Director of Development Data, Haishan Fu, warned that although private lending had returned to many developing economies, the higher cost of borrowing could leave fewer resources available for long-term development.
Infrastructure development is among the priorities competing for government resources as debt-servicing obligations increase.
The findings are particularly relevant as Nigeria continues to seek funds for infrastructure development, budget financing and other economic priorities. Borrowing can support productive investment when the funds are used effectively, especially for projects that improve transportation, electricity supply, industrial productivity and public services. However, the financial benefits depend on project quality, transparency, implementation and the ability to generate sufficient economic value over time. Some policymakers favour commercial borrowing because it can provide access to international capital without the conditions sometimes attached to concessional financing. Others emphasise that high-interest borrowing requires careful scrutiny because repayment obligations may persist long after the borrowed money has been spent. The World Bank’s figures highlight the importance of assessing these trade-offs rather than treating all sources of foreign financing as equally affordable.
As of November 14, 2026, the World Bank’s latest international debt statistics show that Nigeria’s new private-creditor external borrowing commitments in 2025 carried an average interest rate of 9.6%, compared with 1.9% for official-creditor financing. The country’s total external debt stock reached approximately $145.02 billion, while the burden of servicing foreign obligations remained significant relative to export earnings. The figures do not establish that Nigeria is unable to repay its debts, but they demonstrate why interest rates, repayment periods and debt transparency matter for long-term financial planning. Going forward, the challenge for the authorities will be to manage existing obligations, assess the costs of new borrowing and ensure that financing decisions support sustainable economic growth. For Nigerians, the wider concern is whether the resources available to the country can deliver improved infrastructure, economic opportunities and public services while meeting its financial commitments.
