Nigeria is on path to debt trap, Rewane warns

Nigeria, Africa’s third-biggest economy, is on the path to debt trap, Bismarck Rewane, chief executive officer of Lagos-based Financial Derivatives Company has said.

The country’s total public debt stood at N121.67 trillion as of March 2024, up from N97.79 trillion at the end of last year, according to the debt office.

“Nigeria is moving from a debt sustainability path to a debt trap path,” Rewane said in his presentation at the LBS Breakfast Session on Monday. “The high external debt-service-to-revenue ratio is a concern and highlights the need for Nigeria to significantly boost its revenue generation capacity.”

Continued efforts in economic diversification, export enhancement, and fiscal discipline are essential to maintain and improve Nigeria’s debt sustainability, according to the financial expert.

He said the persistent gap between government revenues and expenditures has led to large and growing fiscal deficits in the country.

“Nigeria and several African countries have seen increasing debt levels in recent time. High levels of debt denominated in foreign currencies can be risky due to exchange rate fluctuations,” Rewane said. “Many African countries, including Nigeria, have significant portions of their debt in foreign currencies.”