Economists and the Small and Medium Enterprises Development Agency (SMEDAN) have expressed concern over Nigeria’s growing public debt, which reached N134.3 trillion by the second quarter of 2024. This figure, released by the Debt Management Office, has raised alarms about potential macroeconomic challenges, particularly if the debt servicing burden continues to rise.
With Nigeria’s population estimated at 216.7 million, this means a debt per capita of approximately N619,501. While some government reforms under President Bola Tinubu’s administration have shown progress—such as reducing the debt service-to-revenue ratio from 97% to 67% in 17 months—experts caution that the country is still at risk of falling into a debt trap.
Charles Odii, Director-General of SMEDAN, emphasized the importance of supporting small businesses as a key strategy to drive economic growth and reduce debt dependence. The agency advocates for increased investment in SMEs, particularly in infrastructure and affordable financing.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Public Enterprises, warned that continued public debt accumulation could lead to a vicious cycle, exacerbated by foreign debt exposure and high borrowing costs. He stressed the need for fiscal consolidation and prudent management of public finances to avoid a destabilizing economic situation.
Concerns about Nigeria’s debt burden are further compounded by warnings from bankers, who caution that growing debt levels could weaken investor confidence and limit foreign investment. The nation’s reliance on foreign loans to cover budget deficits continues to fuel this fiscal challenge. If not carefully managed, the rising debt service costs could significantly hinder investments in crucial sectors like healthcare, education, and infrastructure.
