Nigeria’s Federal Government borrowing climbed to N12.62tn in 2024, exceeding the approved borrowing target by N4.79tn and raising fresh concerns about the country’s growing debt burden, fiscal deficit and revenue challenges.
The latest figures from the Budget Office of the Federation show that the government had initially planned to borrow N7.83tn during the year. However, actual borrowing rose to N12.62tn, representing a 61.2 per cent increase over the approved borrowing programme.
The development comes amid increasing pressure on government finances, with weaker-than-expected revenue contributing to a wider budget deficit and greater dependence on borrowing to finance public expenditure.
Revenue Shortfall Drives Higher Borrowing
One of the major factors behind the increase in Nigeria’s borrowing was the Federal Government’s failure to meet its revenue target.
Total Federal Government revenue stood at N20.98tn in 2024, compared with the budget projection of N25.88tn. This represents a shortfall of approximately N4.90tn.
Although government revenue increased from N12.48tn recorded in 2023, the improvement was not enough to meet the government’s target or sufficiently reduce its reliance on debt financing.
Oil revenue remained a significant weakness. Gross oil revenue was N15.07tn, falling about N4.93tn below the budget estimate of N19.99tn.
The revenue shortfall was linked partly to lower crude oil prices and production levels. Average crude oil production during the fourth quarter stood at 1.54 million barrels per day, below the budget assumption of 1.78 million barrels per day.
Non-oil revenue performed better, with gross non-oil revenue reaching N16.09tn. Stronger collections from Company Income Tax, Value Added Tax, the Electronic Money Transfer Levy and Customs revenue contributed to the performance.
How the N12.62tn Borrowing Was Raised
The Federal Government’s financing structure showed that domestic borrowing stood at N6.06tn, within the approved target.
Foreign borrowing, however, increased substantially from the budgeted N1.77tn to N3.37tn. This represented an additional N1.60tn above the original projection.
The government also received N3.19tn in budget support, despite no provision having been made for such financing in the 2024 budget. The support was classified as new borrowing, although its source was not disclosed in the report.
These financing sources combined to push new Federal Government borrowing to N12.62tn.
The report also indicated that new borrowing financed about 36 per cent of the Federal Government’s 2024 budget, highlighting the significant role debt continues to play in Nigeria’s public finances.
Debt Service Adds to Fiscal Pressure
Another major concern is the amount of public resources being committed to debt servicing.
Total debt expenditure reached N12.36tn in 2024, exceeding the N8.27tn originally budgeted for the year by 52.71 per cent.
Higher debt-related expenditure can reduce the fiscal space available for critical areas such as infrastructure, education, healthcare, security and social investment.
Total government expenditure stood at N34.49tn, compared with an approved budget of N35.06tn. Government spending also increased significantly from N23.04tn recorded in 2023.
Nigeria’s Public Debt Reaches N144.67tn
The latest figures showed that Nigeria’s total public debt rose to N144.67tn at the end of December 2024.
The debt-to-GDP ratio was reported at 61.22 per cent, above Nigeria’s self-imposed threshold of 40 per cent and the international benchmark of 56 per cent for comparable economies.
The figures have intensified debate among economists and financial analysts over the sustainability of Nigeria’s debt strategy.
Some analysts argue that borrowing is not necessarily harmful when the funds are invested in productive infrastructure and projects capable of generating economic returns. Others warn that persistent borrowing could increase fiscal risks if government revenue fails to grow sufficiently.
Why Revenue Generation Matters
For Nigeria, improving revenue collection remains one of the most important steps towards reducing dependence on borrowing.
The government has been implementing reforms aimed at strengthening tax administration, increasing non-oil revenue, reducing leakages and improving remittances from government-owned enterprises.
Greater revenue mobilisation could provide the government with more resources to finance development projects without continually increasing its debt obligations.
At the same time, the effectiveness of public spending remains important. Borrowed funds are more sustainable when they are directed towards infrastructure and productive investments that can expand economic activity, create jobs and increase future government revenue.
What the N12.62tn Borrowing Means for Nigeria
The increase in Federal Government borrowing highlights the financial challenges facing Nigeria as authorities attempt to balance development spending with debt obligations.
The situation also makes fiscal discipline increasingly important. If borrowing continues to rise faster than government revenue and economic output, future budgets could face even greater pressure from debt servicing costs.
However, if borrowing is directed towards productive investments while revenue reforms succeed in broadening the tax base and strengthening collections, debt financing could contribute to long-term economic growth.
The challenge for policymakers is therefore not simply to reduce borrowing but to ensure that every borrowed naira delivers measurable economic value.
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Conclusion
The Federal Government’s N12.62tn borrowing in 2024 is another indication of the pressure confronting Nigeria’s public finances. With debt servicing consuming substantial resources and revenue remaining below target, the government faces the difficult task of balancing borrowing, expenditure and fiscal sustainability.
Ultimately, stronger revenue generation, improved spending efficiency, greater transparency and productive investment of borrowed funds will be critical to preventing Nigeria’s debt burden from becoming an even greater constraint on economic development.
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