MARKET NEWS

BY Sami Tunji

Nigeria’s public debt-to-GDP ratio dropped to 39.4 per cent in the first quarter of 2025 following the successful rebasing of the country’s Gross Domestic Product by the National Bureau of Statistics.

The rebasing exercise, which revised the GDP base year from 2010 to 2019, expanded the scope of economic measurement to capture sectors such as the digital economy, creative industries, fintech, and informal activities.

This adjustment significantly increased Nigeria’s nominal economic output and improved its debt sustainability indicators. As of March 31, 2025, Nigeria’s total public debt stood at N149.39tn, comprising N78.76tn in domestic borrowings and N70.63tn in external debt.

The newly rebased GDP, now valued at N379.17tn, covers the 12-month period from Q2 2024 to Q1 2025 and serves as the denominator for the latest debt-to-GDP calculations.

This brings the total debt burden to 39.4 per cent of GDP, just below the 40 per cent ceiling set by the Federal Government and well under the 55 per cent threshold recommended by the World Bank and the International Monetary Fund.

A breakdown of the ratio shows that domestic debt accounts for 20.77 per cent while external debt represents 18.63 per cent. Although the revised figure marks a significant improvement from pre-rebasing levels, it is slightly above the 38.8 per cent recorded at the end of December 2024.

Data from the final quarter of 2024 showed that Nigeria’s total public debt then stood at N144.67tn, comprising N74.38tn in domestic debt and N70.29tn in external liabilities. At the time, the country’s pre-rebased GDP was put at N277.49tn, placing the debt-to-GDP ratio at 52.13 per cent.

However, following the rebasing exercise, the GDP was adjusted upward to N372.82tn, bringing the debt ratio down to 38.8 per cent. Domestic and external debt contributions also declined to 19.95 per cent and 18.85 per cent, respectively.

The PUNCH earlier reported that as of March 2025, Nigeria’s public debt had increased by N27.72tn or 22.8 per cent year-on-year compared to N121.67tn in Q1 2024. On a quarter-on-quarter basis, the debt rose by N4.72tn or 3.3 per cent from the N144.67tn recorded at the end of December 2024.

The rising trend reflects both new borrowing and the weakening naira, which has amplified the local currency value of external debt. While the improved ratios may offer the government more fiscal room, analysts warn that the real burden of repayment and debt servicing remains unchanged—especially in the face of revenue shortfalls and currency volatility.

The PUNCH further observed that despite a post-rebasing upward revision that increased the size of its economy by about $64bn, Nigeria remains the fourth-largest economy in Africa, behind South Africa, Egypt, and Algeria.

Prior to the revision, the World Bank had reported Nigeria’s economy at $187.75bn, ranking it fourth on the continent. The top three economies in Africa were South Africa ($400.26bn), Egypt ($389.05bn), and Algeria ($263.61bn), with Morocco ($154.43bn) rounding out the top five.

Although the updated figures confirm a significant underestimation of Nigeria’s economic size, the revision was not enough to lift the country past Algeria, which maintains third place with a nominal GDP of $263.61bn.

Still, the new data reinforces Nigeria’s status as a major African economy with a much broader and more diversified economic base than previously captured. This contrasts sharply with the outcome of Nigeria’s last rebasing exercise in 2014, when the country leapfrogged South Africa to become the continent’s largest economy.

That rebasing brought sectors such as telecoms, ICT, music, film, online retail, and aviation into the national GDP framework, raising total output to N80.3tn ($509.9bn), well ahead of South Africa’s $370.3bn in 2013.

While Nigeria’s revised GDP now reflects more current economic realities, it also shows the pace at which other African economies have grown and diversified in the past decade—particularly those with greater exchange rate stability, broader formal sector integration, and consistent reforms.