Our COVID-19 column provides insights from experts on the impact of the coronavirus on Nigeria


How Nigeria can manage its rising debt

Mma Amara Ekeruche

Mma Amara Ekeruche

Amara works as a Research Associate at the Centre for the Study of the Economies of Africa (CSEA). She holds a BA (First Class) in Economics.

Earlier this year, in February, to be precise, Nigeria's Debt Management Office (DMO) put forward its new debt management strategy. Quite directly, the plan is to increase the government's debt threshold from 25% of GDP to 40%. 

With shortages in revenue and increased public spending, additional borrowing has become unavoidable, and Nigeria is not alone. Thirty-four other countries in sub-Saharan Africa are having to draw from the IMF's financial assistance programmes due to the pandemic's effect on their revenue base and government expenses. 

However, this decision to increase borrowing in Nigeria comes on the back of already high debt levels.

Debts caused plenty of our resources—93% of federal government revenue in 2020—to be used in paying back these loans. The repayments have been detrimental to other vital areas such as education, health, and infrastructure. 

However, there may be a silver lining. 

Can we convert this debt burden to direct investments, which is commonly known as debt swaps? Your Nigerian Economist assesses the feasibility of debt swaps amid our rising indebtedness.

Read More