Nigeria spends $920m on foreign debt servicing in two months as capital outflows surge

Nigeria paid out about $920 million to service its external debt obligations in the first two months of 2026, according to data contained in the Central Bank of Nigeria’s February 2026 Economic Report.

The figures showed that the country spent $440 million on foreign debt repayments in January and another $480 million in February, reflecting the continued pressure of servicing external obligations amid rising capital outflows.

The report indicated that total capital outflows climbed sharply to $2.75 billion in February from $1.63 billion recorded in January, driven largely by increased capital transfers and higher loan repayments.

According to the apex bank, the rise in outflows was mainly attributable to a significant increase in capital transfers during the period.

“Capital outflows increased, mainly on account of higher capital transfers in the review period. Total capital outflow rose to $2.75 billion, from $1.63 billion in the preceding month,” the report stated.

The CBN noted that capital transfers rose by 91.53 per cent to $2.26 billion in February, while loan repayments increased to $480 million from $440 million recorded in January.

“The development was driven mainly by a 91.53 per cent increase in capital transfers to $2.26 billion, relative to the level in the preceding month. Outflow through loan repayments also rose to $0.48 billion from $0.44 billion in January 2026,” the bank said.

The report further revealed that capital transfers accounted for the largest share of capital outflows at 82.18 per cent, while loan repayments represented 17.45 per cent. Dividend repatriation made up the remaining portion.

An analysis of the data showed that debt servicing constituted nearly one-fifth of total capital outflows in February, underscoring the significant impact of external debt obligations on the country’s foreign exchange position.

Sectoral data indicated that the banking industry accounted for the largest share of capital outflows at 45.96 per cent. The financing sector followed with 26.10 per cent, while the oil and gas sector contributed 15.72 per cent. Telecommunications and manufacturing sectors accounted for 3.51 per cent and 2.62 per cent respectively, with other sectors making up the balance.

Geographically, Lagos remained the major source of capital outflows, accounting for 62.90 per cent of the total, while the Federal Capital Territory contributed 37.04 per cent. The remaining fraction came from other states, including Ogun and Ondo.

Despite the increase in capital outflows, the CBN maintained that Nigeria’s external sector remained resilient during the review period.

The bank said the country recorded stronger trade performance and increased capital inflows despite global economic uncertainties.

“Despite heightened geopolitical risks and trade tensions, the external sector recorded a higher trade surplus and capital inflows, due largely to lower import bills and increased capital transfers,” the report noted.

It added that the nation’s external reserves rose to $50.12 billion in February from $48.88 billion in January, providing import cover of 9.61 months, significantly above the international benchmark of three months.

The latest debt servicing figures come against the backdrop of rising concerns over Nigeria’s growing external debt profile.

Data from the CBN previously showed that the country spent $5.21 billion servicing external debt in 2025, representing more than 72 per cent of its total international payments during the year. The amount was higher than the $4.66 billion recorded in 2024, reflecting an increase of nearly 12 per cent.

The International Monetary Fund, in its 2026 Article IV Consultation Report on Nigeria, projected that the country’s public external debt would rise from $51.9 billion in 2025 to $72.6 billion by 2027.

The projection suggests an increase of about $20.7 billion within two years, highlighting the challenge of balancing development financing needs with debt sustainability.

The IMF also forecast that public external debt service would rise from 8.1 per cent of exports of goods and services in 2025 to 8.8 per cent in 2027, while interest payments on public debt are expected to increase from $2 billion to $3 billion over the same period.

At the federal level, the Fund projected that debt servicing would continue to absorb more than half of government revenues. Interest payments were estimated at 53.2 per cent of Federal Government revenue in 2025 and are expected to remain above 52 per cent through 2027.

Responding to concerns over rising public debt, Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, recently argued that borrowing should be assessed based on its purpose and economic returns rather than the size of the debt alone.

According to him, borrowing to finance productive investments capable of generating returns above the cost of capital should be viewed as a rational economic decision rather than an indication of fiscal recklessness.