Nigeria Spends Nearly $3 Billion on Eurobond Servicing Since Tinubu Took Office

Nigeria has spent close to $3 billion on servicing its Eurobond obligations under President Bola Tinubu’s administration, according to debt-management data and fiscal reports. The figure reflects the growing burden of external debt on government finances and underscores the challenges Nigeria faces in balancing debt obligations with budgetary priorities.

According to data from the Central Bank of Nigeria (CBN), the country’s foreign debt-service costs surged in recent years, driven largely by interest payments on Eurobonds and other external liabilities. Reports indicate that between January and April 2025 alone, Nigeria expended approximately $2.01 billion on external debt servicing — a significant portion of which is attributed to Eurobond-related obligations.

The Debt Management Office (DMO) has previously confirmed that a major refinancing exercise is underway. President Tinubu, through a formal letter to the House of Representatives, sought approval to raise $2.34 billion in new external borrowing, part of which is meant to refinance Eurobonds maturing in November 2025. The President’s request also included a proposal to issue a $500 million debut sovereign Sukuk to diversify Nigeria’s debt instruments.

Economists and analysts say the high debt-service outflow poses serious risks to Nigeria’s fiscal sustainability. Interest rates on Nigeria’s Eurobonds are relatively high, and servicing these obligations consumes a substantial portion of the country’s foreign-exchange reserves, limiting resources available for development and capital expenditure.

A breakdown of the servicing cost reveals that Eurobond coupon payments, amortisation, and other financing fees account for a substantial share of external debt outflows. While Nigeria’s external debt has grown in recent years, analysts argue that the cost of borrowing remains a critical issue. The administration’s plan to refinance maturing Eurobonds through new borrowings has sparked debate among stakeholders, with some warning of a possible debt trap.

In its 2025 budget, the Federal Government allowed for $1.23 billion in new external borrowing, indicating a deliberate strategy to tap international capital markets to plug funding gaps and manage debt maturities. The proposed $2.34 billion package includes this amount alongside a $1.118 billion tranche earmarked specifically for Eurobond refinancing.

Despite the high refinancing need, the government has defended its approach, stating that external borrowing remains a viable option to cover debt maturities and fund infrastructure projects. The $500 million sukuk, in particular, is presented as a way to attract Islamic finance and long-term, more patient capital.

Still, critics warn that repeated reliance on Eurobond markets could expose Nigeria to volatile global interest rate regimes. With dollar-denominated debts, the country is vulnerable to exchange rate swings and higher financing costs, especially if the naira depreciates further.

The fiscal strain is evident: Nigeria’s total debt servicing bill has ballooned in recent years. In 2024, the country spent more than ₦13 trillion on debt service, a 68 percent increase from the previous year. The sharp rise in servicing costs has prompted concerns about the government’s ability to fund critical development priorities without crowding out social spending.

To manage the debt burden, some analysts suggest that Nigeria should prioritize domestic revenue generation, enforce fiscal discipline, and explore concessional financing where possible. They argue that overdependence on high-cost Eurobond debt is unsustainable in the long run.

The DMO, for its part, has acknowledged the risks, but argues that strategic borrowing and debt restructuring remain necessary to ensure liquidity and avoid defaults. It maintains that the mix of new borrowing, refinancing, and innovative instruments like sukuk is part of a balanced debt-management strategy.

In the meantime, pressure is mounting on the government to demonstrate value from the borrowed funds, especially in infrastructure, health, and education. Observers say the real test lies not just in borrowing but in productive deployment — ensuring that debt translates into tangible development outcomes rather than becoming a recurring financial liability.

As Nigeria continues its engagement in global debt markets, the nearly $3 billion spend on Eurobond servicing under Tinubu’s watch underscores the mounting cost of external borrowing and the urgent need for a more sustainable debt strategy.