The International Monetary Fund (IMF) recently released an astounding report on Nigeria’s debt. The report puzzled everyone, especially those with incurable pessimistic views on the mounting debts of Africa’s hitherto largest economy.
The lender of last resort puts Nigeria’s national debts in 2025 at 35.5 per cent of its gross domestic products (GDP). The intriguing aspect of the report was the fact that Nigeria’s debt will drop to 32.2 per cent of GDP in 2026.
That sounds like an implausible contradiction when one considers the fact that the federal government plans to raise $6.5 billion (about N29.2 trillion) in foreign loans to balance the 2026 budget.
Nigeria’s debt in 2025 stood menacingly at N159.2 trillion.
The plan to raise N29.2 trillion in foreign loans to balance the 2026 budget will push the nation’s public debt to N168.08 trillion. Under normal circumstances that will accelerate Nigeria’s debts perilously close to 40 per cent of GDP. That is where the IMF conclusion that the debt will decline to 32.2 per cent in 2026 puzzles many.
The secret of the IMF projection emanates from the fact that Nigeria’s GDP is making remarkable growth. The IMF estimates Nigeria’s GDP in 2025 at $285.08 billion.
However, with the recent developments triggered by daunting reforms in Nigeria’s economy, the GDP is recording tremendous growth. The IMF estimates that Nigeria will end 2026 with a GDP of $377 billion. The projected drop in debt-to-GDP ratio is therefore grounded on magnificent GDP growth.
Nigeria’s GDP growth is on a fast track. So many factors help to accelerate the growth. One of the factors is the boom in the nation’s capital market which has raked in about 15 billion dollars in foreign portfolio investment.
The Nigerian Stock Exchange (NGX) is one of the world’s most profitable capital markets.
Two weeks ago, the market capitalisation of the NGX gained more than N8 trillion in five days. Last week it gained another N5 trillion to stand at N145 trillion.
The tremendous growth in the market capitalisation of the NGX is accelerated by the perplexing performance of stocks listed in the market.
Stocks like Dangote Cement, Bua Foods, Seplat, MTN, GTBank and Zenith record marvelous capital gains and pay irresistible dividend.
Besides their attractive growth in market capitalisation, most of the stocks are offering double digit dividends due to their outstanding performance in 2025. Dangote Cement recorded a profit after tax of $730 million and offered a dividend of N45 per 50 kobo share.
GTBank is paying its excited shareholders an intriguing dividend of N12.76 for the 2025 financial year. That is because the bank raked in profit after tax (PAT) that was pretty close to N1 trillion.
Foreign portfolio investors are struggling to enter the NGX because they expect gains from both ends. The stocks are recording accelerated capitalisation growth which allows them to make unprecedented capital gains from the sale of the shares.
Besides, the dividends declared by the quoted companies are very attractive.
The third factor behind the scramble by foreign portfolio investors for slots in the NGX is the rise in Nigeria’s foreign reserves. For decades, Nigeria’s foreign reserve had loitered around the seemingly jinxed rate of $33 billion.
That made it extremely difficult for the Central Bank of Nigeria (CBN) to allocate foreign exchange to foreign investors to export the proceeds of their investments to their home countries.
Consequently, billions of dollars in foreign investors’ investment proceeds were trapped in Nigeria for years.
Foreign investors fled Nigeria in droves because of that excruciating impediment. Now the foreign reserve of Nigeria stands menacingly at well over $50 billion. With the reserve relatively buoyant, the CBN can promptly allocate foreign exchange to foreign investors to export the proceeds of their investment without delay. Investors’ funds are no longer being tied down in Nigeria.
The next factor behind the growth in GDP projected by the IMF for 2026 which will ultimately drive down the debt-to-GDP ratio making Nigeria, one of the least indebted country, is the recent increase in crude oil production. Nigeria’s crude oil production dropped perilously close to 1.3 million barrels per day in 2024.
Besides the ageing production and evacuation facilities in the nation’s oil fields, crude oil theft was the major factor behind the low oil production in Nigeria.
Crude oil theft was so menacing that even the Nigerian Navy could no longer explain why its patrol boats could not spot the giant barges carting stolen crude oil to the international waters for sale to criminals.
President Bola Tinubu responded to the seemingly helpless situation by issuing marching orders to his chief of defence staff to clip the wings of the oil thieves. The chief of defence staff passed the president’s directives to his field commanders and everyone knew that it was time to confront the malady.
The war against crude oil theft has not been won. However, there has been significant improvement in crude oil production in recent times that suggests that the oil thieves now know that something could happen if they continue as usual.
Crude oil production recently inched up to 1.8 million barrels per day, up from the abysmal rate of 1.4 million barrels per day in 2024. That is an improvement from 2025 when the budget production target of 2.02 million barrels per day was missed by a minimum of 500, 000 barrels per day.
That helped to worsen the budget deficit for the year. Now, things are looking up.
Another factor behind the exciting GDP growth projected by the IMF is the increase in non-oil exports in Nigeria.
The Nigeria Export Promotion Council (NEPC) has not only encouraged Nigerian producers of export goods to add value to their products, it has zealously helped to locate markets for their goods.
That has resulted in increased value for Nigerian exported goods while the quantity reaching the market has also improved.
Nigeria is making waves. It may soon return to the enviable position of Africa’s largest economy.