Nigeria’s Private External Loans Attract 9.6% Interest- World Bank

Nigeria paid significantly higher interest rates on new external loans from private creditors than from official lenders in 2025, with borrowing costs averaging 9.6 per cent and 1.9 per cent, respectively, according to the World Bank Group.

The figures mean that private creditors charged Nigeria five times more interest than official lenders, highlighting the cost difference between the two sources of international financing.

The development comes as Nigeria’s total external debt stock climbed to $145.02 billion in 2025.

The World Bank’s latest International Debt Statistics report showed that the country’s external debt increased by 6.6 per cent in 2025 compared with the previous year.

The figure also extends a decade-long rise in external borrowing, from $83.21 billion in 2015. This represents an increase of about $61.8 billion over the 10-year period.

“The new loans from official creditors had an average maturity of 25 years, a grace period of five years and an interest rate of 1.9 per cent. In comparison, private creditors offered an average maturity of 12 years, a grace period of eight years and an interest rate of 9.6 per cent,” the report stated.

The higher rates charged by private creditors mean that Nigeria faces greater financing costs when borrowing from commercial international lenders. However, the actual repayment burden depends on the size, currency, maturity and terms of individual loans.

According to the report, Nigeria’s external debt comprised $62.40 billion in public and publicly guaranteed debt, $54.48 billion in private nonguaranteed debt and $28.14 billion in short-term debt.

Multilateral creditors accounted for $31.37 billion of the country’s public and publicly guaranteed debt, while bilateral lenders held $6.68 billion. Private creditors accounted for the remaining $24.35 billion.

The International Development Association, the World Bank’s concessional lending arm, was Nigeria’s largest multilateral creditor, with $18.53 billion.

The report also listed International Monetary Fund special drawing rights allocations at $5.52 billion, while other multilateral institutions held $7.32 billion.

China was Nigeria’s largest bilateral creditor, with $5.67 billion, followed by France with $774 million and other bilateral lenders with $237 million.

The World Bank figures also showed that Nigeria continued to face a significant external debt service burden relative to its foreign exchange earnings.

The country’s debt service-to-export ratio stood at 19 per cent, representing a 9.6 per cent increase. Meanwhile, debt service as a share of gross national income rose by 6.9 per cent to five per cent.

However, Nigeria’s external debt-to-export ratio declined by 4.3 per cent to 212 per cent, while external debt as a proportion of gross national income fell by 6.6 per cent to 51 per cent.

The contrasting figures suggest that although some debt indicators improved relative to exports and national income, the cost of servicing the debt remained a concern.

Nigeria’s total external debt stock stood at $145.02 billion in 2025, compared with a gross national income of $281.70 billion and a population of 237.5 million, according to the World Bank classification.

The Chief Statistician of the World Bank Group, Haishan Fu, said the institution had worked with borrowing countries for more than five decades to build a comprehensive and comparable database of external debt in developing economies.

He, however, stressed that debt transparency should not depend solely on information provided by borrowing countries.

“A major advance in recent years has been the systematic reconciliation of loan-by-loan information reported by borrowers through the World Bank Group’s Debtor Reporting System with corresponding records provided by bilateral creditors. The results show what cooperation between borrowers and creditors can achieve.

“Since the creditor data-sharing exercise began in 2022, successive rounds have helped reconcile loan-level records, identify discrepancies, validate information, and close critical data gaps, strengthening the quality and consistency of external debt statistics.

“This is debt transparency in practice. It is not simply about publishing more data. It is about comparing borrowers’ and creditors’ records, identifying inconsistencies, resolving differences, and progressively improving the common information base on which debt decisions are made,” he added.