In the first two months of 2026, Nigeria spent $920 million on external debt servicing as foreign loan repayments escalated alongside rising capital outflows.
According to the Central Bank of Nigeria’s February 2026 Economic Report, the country allocated $440 million to foreign loan repayments in January and $480 million in February, bringing the two-month total close to the $1 billion mark.
The report reveals that total capital outflows rose significantly in February, driven largely by higher capital transfers and increased loan repayments. According to the CBN, “Capital outflows increased, mainly on account of higher capital transfers in the review period. Total capital outflow rose to $2.75bn, from $1.63bn in the preceding month.”
Although debt repayments also played a role in the increased outflows, the apex bank ascribed the increase mainly to a substantial increase in capital transfers.
It stated, “The development was driven mainly by a 91.53 per cent increase in capital transfers to $2.26bn, relative to the level in the preceding month. Outflow through loan repayments also rose to $0.48bn from $0.44bn in January 2026.”
The report noted a decrease in dividend repatriation during the period under review. According to the Central Bank of Nigeria (CBN), capital transfers dominated total capital outflows at 82.18%, followed by loan repayments at 17.45%, while dividend repatriation made up the remaining balance.
An analysis of this data highlights Nigeria’s intensifying debt servicing pressure, with loan repayments alone accounting for nearly one-fifth of the nation’s total capital outflows in February.
Furthermore, the report also revealed that the banking sector accounted for 45.96 percent of capital outflows, with the financing sector coming in second at 26.10 percent, oil and gas at 15.72 percent, telecommunications at 3.51 percent, and production/manufacturing at 2.62 percent. The remaining sectors made up the remaining portion.
Additionally, it also showed that Lagos accounted for 62.90 per cent of capital outflows, followed by the Federal Capital Territory at 37.04 per cent, with Ondo, Ogun and other states accounting for the remainder.
IMF’s projection
These findings align closely with projections from the International Monetary Fund (IMF), which match the Debt Management Office’s (DMO) latest figures putting Nigeria’s public external debt at $51.86 billion as of December 31, 2025. The IMF expects this external debt stock to surge by nearly $20.74 billion between the end of 2025 and 2027.
Additionally, public external debt service—which accounted for 8.1% of goods and services exports in 2025—is projected to drop to 5.0% in 2026 before rising to 8.8% by 2027. The Fund also forecasts that annual interest payments on public debt will climb from $2 billion in 2025 to $3 billion by 2027.
Speaking in Abuja at a capital market conference, the Finance Minister pointed out that critics do a disservice by only looking at the total size of the debt. He argued that the rational approach is to evaluate what the debt is financing, its cost, and whether the generated returns outpace the capital expense.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, previously criticized critics and economic analysts for condemning government borrowing without evaluating the specific purpose, overall cost, and anticipated financial returns of the debt.
Oyedele spoke in Abuja at the Fellowship Award Ceremony and 2nd Biennial Conference of the Capital Market Academics of Nigeria. He said, “When analysts go on TV and join the populist view to accuse the government of borrowing, you are doing a disservice. The relevant question is never simply how much debt.
Backstory…
Nigeria’s rising foreign debt servicing bill has become a major concern amid the country’s growing external borrowing and mounting fiscal pressures. Over the past few years, the Federal Government has increasingly relied on loans from multilateral institutions, bilateral partners and international capital markets to finance infrastructure projects, support budget deficits and stabilise the economy.
However, the sharp depreciation of the naira, higher global interest rates and increasing debt obligations have significantly raised the cost of servicing these loans, consuming a larger share of the country’s foreign exchange earnings.
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