Nigeria faced significantly higher borrowing costs when accessing external financing from private creditors compared to official lenders throughout 2025, according to comprehensive data released by the World Bank Group.
The latest International Debt Statistics indicate that interest rates charged by private creditors averaged 9.6 per cent—roughly five times higher than the 1.9 per cent average offered by official lenders.
This sharp cost disparity underscores the financial pressure Nigeria encountered as its total external debt stock expanded by 6.6 per cent in 2025, pushing the cumulative external debt burden to $145.02bn.
The figures mark a persistent upward trajectory over a ten-year horizon, surging by approximately $61.8bn from the $83.21bn recorded in 2015.
A breakdown of the financing structures highlights stark differences in credit terms. New loans secured from official creditors came with an average maturity period of 25 years, a five-year grace period, and a modest 1.9 per cent interest rate. In sharp contrast, commercial international capital from private creditors carried an average maturity of 12 years, an eight-year grace period, and a steep 9.6 per cent interest rate.
While private borrowing entails substantially heavier financing costs, the World Bank noted that actual repayment burdens ultimately depend on individual loan sizes, currency compositions, maturities, and specific terms.
Nigeria’s broader debt composition for the period comprised $62.40bn in public and publicly guaranteed debt, $54.48bn in private nonguaranteed debt, and $28.14bn in short-term obligations.
Within the public and publicly guaranteed category, multilateral institutions held $31.37bn—led heavily by the International Development Association with $18.53bn and IMF special drawing rights allocations totaling $5.52bn—while bilateral lenders accounted for $6.68bn, prominently featuring China at $5.67bn and France at $774m.
Private creditors accounted for the remaining $24.35bn of public obligations.
Despite improvements in certain structural metrics—such as the external debt-to-export ratio declining by 4.3 per cent to 212 per cent, and external debt relative to gross national income falling by 6.6 per cent to 51 per cent—the country’s immediate debt service burden remained heavy.
The debt service-to-export ratio rose by 9.6 per cent to stand at 19 per cent, while debt service as a proportion of gross national income increased by 6.9 per cent to 5 per cent.
These contrasting movements illustrate that broader reductions in debt stock ratios did not translate into immediate relief for foreign exchange-dependent debt servicing.
Commenting on the wider implications of the data, the Chief Statistician of the World Bank Group, Haishan Fu, emphasized the critical importance of debt transparency and rigorous data reconciliation between debtor nations and global creditors.
As Nigeria and other developing economies navigate complex international capital markets, the widening spread between concessional official financing and commercial private borrowing remains a pivotal factor in medium-term fiscal sustainability.
