Nigeria’s private sector foreign debt has increased by 179.6 per cent in seven years, reaching approximately $54.5 billion in 2025 from $19.49 billion recorded in 2018, according to the World Bank.
The figures highlight the growing dependence of Nigerian businesses on foreign financing amid rising investment requirements, economic challenges and the need for additional capital to support commercial activities.
According to the World Bank’s International Debt Report 2026, private sector nonguaranteed external debt stood at $54.476 billion as of December 2025.
The latest figure means that Nigerian companies now owe foreign creditors almost three times the amount recorded seven years earlier.
The report also shows that private companies’ external borrowing has increased faster than government-backed foreign debt over the same period, making businesses an increasingly significant part of Nigeria’s overall external debt exposure.
The findings come at a time when the country’s total external debt continues to grow, raising questions about borrowing costs, repayment obligations and the financial risks facing both public and private institutions.
Nigerian Companies’ Foreign Borrowing Rises Sharply
The World Bank’s figures show that private sector nonguaranteed external debt increased from $19.49 billion in 2018 to $54.476 billion in 2025.
This represents a 179.6 per cent increase over the seven-year period.
Private nonguaranteed external debt refers to money borrowed by private businesses from foreign banks, international investors and other lenders without the Federal Government or another public institution guaranteeing repayment.
This means the borrowing obligations are primarily the responsibility of the companies that obtained the loans rather than direct liabilities of the Nigerian government.
The distinction is important because Nigeria’s external debt profile includes several categories of borrowing, including government obligations, publicly guaranteed loans, private sector foreign debt and short-term external liabilities.
The World Bank’s latest figures suggest that private businesses are playing an increasingly important role in the country’s relationship with international creditors.
Although private companies are responsible for repaying their own nonguaranteed loans, difficulties in meeting those obligations could create wider economic concerns, particularly where businesses operate in important sectors or have significant financial connections with domestic institutions.
Private Sector Debt Grows Faster Than Government-Backed Borrowing
The growth in private companies’ foreign debt has outpaced the increase in Nigeria’s public and publicly guaranteed external debt.
According to the World Bank, government-backed external obligations rose by 155.5 per cent between 2018 and 2025.
The amount increased from $24.422 billion in 2018 to approximately $62.4 billion by the end of 2025.
In comparison, private sector nonguaranteed debt increased by 179.6 per cent during the same period.
The changing relationship between the two categories shows how private foreign borrowing is becoming a larger component of Nigeria’s external financial obligations.
In 2018, private sector nonguaranteed debt represented approximately 79.8 per cent of public and publicly guaranteed external debt.
By December 2025, that proportion had increased to 87.3 per cent.
The development indicates that private companies are increasingly relying on foreign financing alongside government borrowing to meet their financial requirements.
However, the figures do not mean that all private sector borrowing is guaranteed by the government or that the Federal Government is automatically responsible for repaying those loans.
Nigeria’s Total External Debt Reaches $145 Billion
The World Bank report also revealed that Nigeria’s total external debt increased substantially between 2018 and 2025.
The country’s external debt stock rose from $46.238 billion in 2018 to $145.015 billion in 2025.
This represents an increase of more than $98 billion over seven years, reflecting the combined growth of government borrowing, private sector foreign loans and short-term external obligations.
A breakdown of Nigeria’s external debt in December 2025 showed that:
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Public and publicly guaranteed debt stood at $62.4 billion.
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Private sector nonguaranteed external debt reached $54.476 billion.
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Short-term external debt amounted to $28.139 billion.
The figures demonstrate that private sector and short-term obligations account for a substantial portion of Nigeria’s external debt exposure.
They also highlight why assessing the country’s financial position requires looking beyond government borrowing alone.
The distinction between public and private debt is particularly important when examining the country’s ability to manage external financial obligations and respond to changing international economic conditions.
Foreign Private Loans Come With Higher Interest Rates
One of the major concerns highlighted in the World Bank report is the difference between borrowing costs from private international lenders and official creditors.
Nigerian borrowers obtaining new financing from private foreign creditors in 2025 faced an average interest rate of 9.6 per cent.
This was considerably higher than the 1.9 per cent average interest rate attached to new loans from official creditors, including foreign governments and multilateral financial institutions.
The difference illustrates the financial pressure companies and governments may face when depending on commercial international financing.
The report also identified differences in repayment periods.
New loans from private creditors carried an average maturity of 12 years, compared with 25 years for financing obtained from official creditors.
Longer repayment periods can give borrowers additional time to meet their obligations, while shorter maturities may require more aggressive repayment arrangements.
For Nigerian companies, borrowing at higher interest rates could increase operating costs and reduce the amount of revenue available for business expansion, infrastructure development and other investments.
However, foreign loans can also provide businesses with access to capital that may not be readily available through domestic financial markets.
The economic impact therefore depends partly on how effectively companies deploy borrowed funds and whether the returns generated are sufficient to cover financing costs.
Rising Debt Raises Questions About Nigeria’s Financial Stability
Nigeria’s increasing external debt exposure comes amid broader concerns about the financial conditions facing developing economies.
The World Bank’s International Debt Report 2026 showed that external debt across low- and middle-income countries increased by 5.5 per cent to a record $9.4 trillion in 2025.
Developing economies also faced substantial repayment obligations, with total principal and interest payments reaching approximately $1.4 trillion during the year.
The World Bank has warned that rising debt-service costs can place pressure on government spending and reduce the resources available for important development priorities.
For Nigeria, the growing volume of private sector foreign borrowing introduces additional considerations for financial regulators, businesses and policymakers.
Companies with substantial foreign currency obligations may face repayment difficulties when their revenues are generated mainly in naira, particularly when exchange-rate movements increase the domestic cost of servicing dollar-denominated loans.
This makes effective financial management, access to foreign exchange and sustainable borrowing practices important factors in managing private sector debt.
The government and relevant financial institutions will also need to maintain effective monitoring of external financial obligations to improve transparency and identify potential risks.
What the Rising Private Sector Debt Means for Nigerian Businesses
The increase in private sector foreign debt reflects the growing role of international financing in Nigeria’s business environment.
Foreign loans can help companies expand operations, acquire equipment, develop infrastructure and finance projects that require substantial investment.
For businesses operating in sectors such as manufacturing, telecommunications, energy and construction, access to international capital can provide opportunities to undertake projects that might otherwise be difficult to finance locally.
However, the increasing cost of foreign borrowing also presents challenges.
Companies must generate sufficient returns to meet interest payments and repay their loans, particularly when international lending conditions become more expensive.
Exchange-rate fluctuations could create additional pressure for businesses with dollar-denominated obligations but limited foreign currency earnings.
The World Bank’s findings therefore highlight the importance of responsible borrowing, stronger corporate financial management and improved transparency in Nigeria’s private sector.
As the country’s economy continues to attract international financing, ensuring that borrowed funds support productive investments will be important for maintaining financial stability.
The increase to $54.5 billion also demonstrates that Nigeria’s external debt situation extends beyond government obligations, with private businesses becoming an increasingly significant part of the country’s foreign borrowing landscape.
