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The Debt management Office (DMO) has released the analysis of Nigeria’s foreign debt stock in the second quarter of 2018. In a document titled: ‘States, Federal Capital Territory (FCT) and Federal Governments’ External Debt Stock as at June 30, 2018,’  it shows that Nigeria’s commercial and industrial capital, Lagos State, retained its position as the most externally indebted state in the country with $1.45 billion, as at the period ending June, 2018.

The document from DMO also shows that Nigeria’s total external debt stock stood at $22.08 billion in the period under review. This shows a quarter on quarter debt growth of 0.05% from $22.07 billion in the period ending March, 2018. The total external debt earlier stood at $18.91 billion as at December, 2017.

According to the DMO publication, out of Nigeria’s total foreign debt of $22.08 billion, Federal Government accounts for $17.83 billion, which is 81% of the total foreign debt stock, as at the end of June, 2018. The 36 states and the FCT account for the remaining 19% of the nation’s total foreign debt portfolio, with a joint debt of $4.25 billion.

Debt Portfolio Breakdown

The breakdown of the total debt portfolio of states shows that although, Lagos State still tops other states, its external debt reduced from $1.47 billion at the end of the last quarter of 2017 to $1.45 billion in June 2018. The report indicates that Edo State is next to Lagos with an external debt stock of $279 million as at the end of the period ending June 2018 while Kaduna was third with $232.97 million.

Other high externally indebted states as at Q2 2018 include Cross River ($193.7 million), Bauchi ($134.9 million), Enugu ($127.9 million), and Anambra ($107.4 million). The document also listed other top external debtors to be Oyo ($106.34 million), Ogun ($105.3 million), and Osun ($101.5 million).

Meanwhile, the DMO also shows that Taraba State has the lowest foreign debt portfolio in Nigeria, as at the period ending June 2018 with $22.1 million, followed by Borno State with $22.1 million. Other low externally indebted states at the end of the period under review are Yobe ($28.4 million), Plateau ($29.6 million), and Kogi with a foreign debt stock of $32.37 million.

External Debt Sources

Nigeria’s foreign debts are sourced from 4 quarters:

  • Out of Nigeria’s total external debt of $22.08 billion, as the end of the second quarter of 2018, only 40% are commercial loans which comprise of the $8.8 billion Eurobonds and Diaspora Bonds incurred solely incurred by the Federal Government.
  • The second is the Bilateral (CHINA EXIM BANK, Commercial Total JICA, INDIA, KFW) which stood at $2.12 billion and also solely incurred by the Federal Government.
  • Bilateral (AFD) loan contributed $274.98 million as at June 2018.
  • Multilateral debt of $10.89 billion was jointly incurred by the Federal Government and all the 36 states.

Nigeria’s debt stock

Since Nigeria’s total debt stock stood at $73.2 billion as of the period ending June 2018. The DMO document shows that the ratio between Nigeria’s domestic and external debt stood at 70:30, at the end of the same second quarter of 2018. This shows Nigeria’s total foreign debt stock reduced relatively to the domestic stock since the ratio was 73:27 as at the period ending December 2017. However, the nation’s public debt stock increased marginally from December 2017 by 3.01%.

Speaking recently, the Director-General of DMO, Patience Oniha,  said:

“One of the beneficial outcomes is the rebalancing of the debt stock, the ratio of domestic debt to external debt inching towards the target of 60:40 and the target of 75:25 between long term domestic debt and short term domestic debt.”

Why Rebalancing Debt Stock

  • The debt ratio of 60:40 between domestic and foreign debt is somehow crucial so that Nigeria’s total public debt stock will not be completely made up of external debt.
  • It is much easier for governments at both levels to borrow money domestically compared to seeking foreign multilateral, bilateral or commercial loans.
  • Interest rates on foreign loans are lower compared to those of external loans, thereby making the Federal Government to recently borrow from external sources to refinance maturing local debts.


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