Market News

By Abdullateef Aliyu, Lagos

The Lagos Chamber of Commerce and Industry (LCCI) has expressed a concern over Nigeria’s rising public debt profile, warning that the current pace of borrowing is capable of undermining fiscal stability.

In an address on the state of the economy delivered yesterday, LCCI President, Mr. Gabriel Idahosa expressed mixed feelings over Nigeria’s economic outlook.

He stated that while there are signs of progress in macroeconomic stability and inflation moderation, the debt sustainability remains a concern.

Idahosa’s address, titled “State of the Economy: Q4 2025,” reflected the Chamber’s deep analysis of global and domestic economic trends, and its recommendations to the Federal Government on sustaining recovery and fostering a more resilient private sector.

The LCCI president disclosed that Nigeria’s total public debt stood at N152.4 trillion as of June 2025, representing a year-on-year increase of N18.1 trillion or 13.5 percent from N134.3 trillion recorded in the same period of 2024.

The debt stock also rose by N3.01 trillion, or 2 percent, between March and June 2025.

According to Idahosa, this continuous upward trajectory reflects both fresh borrowings and the impact of a depreciating exchange rate on external obligations.

External debt rose to N71.85 trillion ($46.98 billion), while domestic debt reached N80.55 trillion ($52.67 billion), each increasing by over 13 percent compared to the previous year.

“Despite notable improvements in revenue performance, driven by stronger non-oil receipts, higher oil output, and relative exchange rate stability, both the federal and subnational governments have continued to pursue external loans aggressively,” he said.

The Chamber warned that debt servicing costs continue to consume a large portion of government revenue, crowding out critical investment in health, education, and infrastructure. On the domestic front, the Federal Government remains the largest borrower, accounting for N76.59 trillion, while subnational governments and the FCT collectively hold N3.96 trillion.

Idahosa explained that while domestic borrowing reduces exchange rate exposure, the high interest rates on government securities make private borrowing more expensive and limit access to affordable credit for businesses.

“Although Nigeria’s public debt remains within the sustainable threshold, sustainability is highly sensitive to fiscal vulnerabilities. Without disciplined, growth-oriented debt management, the current pace of borrowing could erode investor confidence and compromise the country’s future fiscal space,” he cautioned.

Speaking on the broader macroeconomic performance, Idahosa noted that Nigeria’s economy has shown resilience despite global and domestic headwinds.

Following the GDP rebasing in 2024, the nation’s nominal output stood at N372.8 trillion, up 41.7 per cent from N314 trillion in 2023, making Nigeria the fourth-largest economy in Africa.

Real GDP growth accelerated to 4.23 percent in the second quarter of 2025—the highest since Q2 2021—driven by a 20.46 percent rebound in the oil sector and steady expansion in non-oil activities.

“The sustained disinflation trend is commendable and reflects improved policy coordination. Lower inflation should translate into reduced business costs and ease cost-of-living pressures on households.”

The Chamber urged the Central Bank of Nigeria (CBN) to maintain clear and predictable policy communication to anchor expectations and prevent speculation in foreign exchange and money markets.

He noted that the IMF’s latest review projects Sub-Saharan Africa to grow by 4.1 percent in 2025, with Nigeria among key contributors. However, the report, he noted, highlights elevated debt servicing costs, weak revenue mobilization, and macroeconomic fragilities as persistent threats.

“The IMF’s warning is timely. Nigeria’s reliance on domestic borrowing is pushing up the cost of capital and crowding out private investment. We must improve debt management and adopt a balanced fiscal approach that supports enterprise growth,” Idahosa said.