In the bustling markets of Port Harcourt, vendors like Favour, a small business owner selling fabrics, feel the pinch of rising costs every day. She remembers the day in May 2023 when President Bola Tinubu declared the end of petrol subsidies.
That move, along with opening up the foreign exchange market, promised to steady the economy and ease the burden of growing national debt. Many hoped these changes would free up funds for better roads, schools, and jobs.
The reforms aimed to reshape Nigeria’s finances. Removing subsidies on petrol meant the government would save billions of naira each year, money that once went to keeping fuel prices low. Liberalizing the foreign exchange market allowed the naira to find its value based on supply and demand, drawing in more investors and stabilizing currency flows. Experts saw these steps as ways to build a stronger foundation for growth.
Yet, the numbers tell a different tale. By the end of March 2025, Nigeria’s total public debt reached N149.39 trillion, up from N144.67 trillion just three months earlier. This rise happened even as the reforms took hold, showing that debt pressures persist.
Several factors drive this ongoing increase. The naira’s value dropped sharply after the exchange rate changes, making foreign loans more expensive in local terms. Foreign debt, which makes up a big chunk of the total, ballooned because of this shift.
At the same time, the economy relies heavily on oil exports, leaving it open to swings in global prices. When oil revenues dip, the government borrows more to cover expenses. Spending on wages, projects, and other needs keeps expanding, adding to the pile.
This situation creates real challenges for the country. Debt payments now eat up a large share of the budget, pulling resources away from vital areas like healthcare and education.
Also see: Tax Reforms Boost Revenue, FIRS Reports
Inflation stays elevated, pushing up the cost of food and transport for families across Nigeria. Businesses face higher borrowing costs, slowing down investment and job creation. The economy grows, but at a pace that falls short of lifting millions out of poverty.
Looking ahead, this debt path carries serious risks. If oil prices tumble or security issues disrupt production, revenues could shrink further, forcing even more borrowing. Global lenders might charge higher interest, making repayment tougher.
It means Nigeria must push harder for changes, like boosting non-oil industries such as farming and tech, refining more oil at home, and collecting taxes more efficiently. These efforts could help stabilize finances and open doors to stronger growth, projected at around 3.4 percent for 2025.
For people like Favour, the story underscores a need for balance. Reforms bring promise, but taming debt requires steady action to secure a brighter future for all Nigerians.
