Foreign debt owed by Nigerian companies to overseas lenders reached $54.48 billion in December 2025, a 179.6 per cent rise from $19.49 billion in 2018, according to the World Bank's "International Debt Report 2026."

Private sector borrowing now represents 37.6 per cent of Nigeria's total external debt of $145.015 billion, which also comprises government and publicly guaranteed obligations and short-term debt. The figure marks a decisive shift in the composition of the country's exposure to foreign creditors.

The World Bank classifies these obligations as private sector nonguaranteed external debt. The report states: "Private nonguaranteed debt comprises long-term external obligations of private debtors that are not guaranteed by a public entity."

How Fast Has Company Borrowing Grown?

Company borrowing grew faster than government-backed debt over the seven-year period. Public and publicly guaranteed external obligations rose 155.5 per cent, from $24.422 billion in 2018 to $62.4 billion in 2025. Private nonguaranteed debt grew at 179.6 per cent over the same window.

In relative terms, the gap has narrowed sharply:

• Private nonguaranteed debt equaled 79.8 per cent of public and publicly guaranteed external debt in 2018.
• By 2025, that ratio had climbed to 87.3 per cent.
• Short-term external debt — obligations with an original maturity of one year or less — stood at $28.139 billion in 2025.

Total external debt nearly tripled over the period, from $46.238 billion in 2018 to $145.015 billion in 2025.

Public and publicly guaranteed debt, as defined by the report, covers long-term obligations of public debtors, including the central government and state-owned enterprises.

What Does Private Credit Cost Nigeria?

The World Bank report highlighted the significantly higher cost of private international financing compared with official creditors. New loans obtained by Nigeria from private creditors in 2025 carried an average interest rate of 9.6 per cent, against 1.9 per cent for loans from official creditors, including foreign governments and multilateral development institutions.

Repayment terms diverge just as sharply. Private creditors offered an average repayment period of 12 years with an eight-year grace period. Official creditors offered 25 years with a five-year grace period.

The interest-rate spread means every dollar borrowed commercially costs Nigeria roughly five times more in annual interest than a dollar borrowed from official sources.

How Sustainable Is the Debt Burden?

The World Bank's debt indicators show Nigeria's external debt stood at 212 per cent of exports and 51 per cent of Gross National Income in 2025. Debt service accounted for 19 per cent of exports and 5 per cent of GNI.

The external debt-to-GNI ratio of 51 per cent means foreign obligations now equal about half of the country's annual national income.

What Are the Risks Going Forward?

Although private sector nonguaranteed debt does not constitute a direct liability of the government, the report flagged two structural vulnerabilities. Increased foreign currency borrowing exposes companies to exchange rate movements and refinancing risks.

The exposure is most acute where company revenues are largely generated in naira, leaving a mismatch between earnings currency and debt-service currency.

Private sector foreign loans now sit within roughly $8 billion of government-backed external obligations — a parity that was unthinkable seven years ago.