Nigeria Spent N3.9 Trillion More on Debt Repayment Than Development in Two Years

Over the past two years, debt servicing has overtaken capital spending by about N3.9tn, showing how repayment pressure is squeezing the government’s room to invest in roads, power, health, education, and other growth-driving sectors.

The Federal Government spent N27.2tn servicing public debt across 2024 and 2025. In 2024 alone, debt servicing reached N12.63tn, above the N8.56tn budgeted for the year. In 2025, the burden rose further to N14.57tn, also higher than the originally provided N13.12tn. That means debt service beat budget projections in both years, and did so by a wide margin.

Capital Spending Is Falling Behind

The comparison with capital expenditure is where the issue becomes harder to ignore. In 2024, debt servicing exceeded capital spending by about N1.04tn. In 2025, the gap widened to roughly N2.87tn. Combined, that is the N3.91tn shortfall between what government spent keeping up with debt obligations and what it spent on capital development.

That matters because capital expenditure is the part of the budget most closely tied to long-term economic expansion. It is where infrastructure gets built, public assets are upgraded, and productive capacity is strengthened. Debt service, by contrast, keeps the system current but does not, by itself, create new growth. When repayment begins to outrun investment, the country starts financing its past faster than it is building its future.

The pressure is also visible in revenue. The figures show that debt servicing absorbed about 60 per cent of Federal Government revenue in 2024. By November 2025, that ratio had risen to roughly 66 per cent, meaning close to two-thirds of revenue was already going into debt obligations. That leaves far less room for capital projects, social spending, and fiscal flexibility.

The government’s explanation is that the surge is not mainly a sign of reckless new borrowing, but the result of macroeconomic adjustments. The sharp depreciation of the naira raised the local-currency cost of servicing external debt, while higher domestic interest rates pushed up the cost of servicing naira-denominated obligations. In other words, the debt burden became heavier not only because of the stock of debt itself, but because the environment around that debt became more expensive.

That explanation is important, but it does not remove the underlying concern. Whether the rise came from new borrowing or valuation effects, the consequence is the same for the budget: more money is being locked into repayment, and less is available for investment.

Weak Oil Revenue Has Made the Situation Worse

There is another layer to the problem. The report says projected oil and gas federation revenue for 2025 was N37.4tn, but actual inflows came to only about N7tn, or roughly 19 per cent performance. That gap matters because oil revenue still carries a large weight in federal finances. When those inflows fall short, debt service becomes even more oppressive because it is sitting on top of weaker-than-expected revenue.

This is why the debt debate should move beyond the size of public debt and focus more sharply on the quality of fiscal space. A country can carry debt and still grow if revenue is strong, repayment is manageable, and capital spending remains protected. The danger begins when servicing costs start to crowd out the very investments needed to expand the economy and improve future revenue.

That is where Nigeria now appears most vulnerable. If repayment keeps taking priority over development spending, then roads get delayed, infrastructure gaps widen, and public services weaken. The impact may not show up all at once, but over time it accumulates: weaker productivity, slower investment response, and less confidence that the state can deliver the conditions needed for growth.

The Warning Is Already in the Numbers

The most troubling part is that this is no longer a warning on the horizon. It is already happening in the numbers. Debt service has surpassed capital spending. Revenue is under strain. Budget overshoots are recurring. And the state is being forced to spend more defending its balance sheet than building its economy.

Nigeria’s fiscal challenge, then, is not simply to borrow less or argue over debt optics. It is to restore the balance between repayment and development. Because once a government starts spending more on yesterday’s obligations than tomorrow’s capacity, growth becomes harder to finance, harder to sustain, and harder to feel in the real economy.