While South Africa’s external debt stock rose 57 percent to $170 billion, Egypt’s rose 263 percent to $131 billion, with both countries having larger external debt stocks than Nigeria. Nigeria has grown its external debt stock by the most among African peers in the last 10 years, yet it is the one that would have lost a decade of economic growth by the end of 2021.
According to data contained in the World Bank international debt report 2022, Nigeria’s total external debt stock ballooned by 288 percent from just $18 billion in 2010 to $70 billion in 2020. In the same time frame, the other two African countries that make up the continent’s three largest economies, South Africa and Egypt grew their external debt at a slower pace.
While South Africa’s external debt stock rose 57 percent to $170 billion, Egypt’s rose 263 percent to $131 billion, with both countries having larger external debt stocks than Nigeria. Ghana, West Africa’s second largest economy, grew its external debt stock by 287 percent, almost at par with Nigeria but still slightly lower. Between the same 10-year period, however, Ghana and Egypt have had higher economic growth rates above population growth. While Ghana grew by 6 percent, Egypt grew by 3.6 percent. South Africa and Nigeria did not manage to grow as fast.
South Africa only expanded by 0.68 percent while Nigeria grew by 2.5 percent. But given that South Africa’s external debt stock only rose 57 percent compared with Nigeria’s 288 percent, it is the latter that has more questions to answer about how it has utilised the external debt raised. Critics say the external debt amassed in the last 10 years has not helped the economy as much as it should have if well utilised.
In 2010, Nigeria had 158 million people and an economy worth $361 billion. By the end of 2021, the World Bank projects the economy would have lost years of robust growth, specifically between 2010 and 2014, and will be back at the same place it was in 2010.
Only problem is that the population will be around 206 million at the end of 2021, 33 percent higher than 2010 level.
Breakdown of Nigeria’s external debt stock
The World Bank’s debt report breaks down the relevant data on Nigeria’s total external debt stock into summary of external debt data by debtor type, external debt stock by creditor type, net financial inflows as well as debt ratios.
The 194-page report, which has a whole page on Nigeria, puts the country’s total external debt stock at $18.822 billion in 2010 before almost doubling to $35.716 billion in 2016 and then rising quickly to $45.722 billion in 2017. By 2018, the total external debt stock of Nigeria had climbed to $54.184 billion, $60.006 billion in 2019 and then $70.318 billion the following year.
Of the external debt stock in 2020, a total of $5.958 billion was classified as “use of IMF credit” and $11.415 billion accounted for debt owed the World Bank itself while the total long-term external debt was put at $64.370 billion. In 2020, the amount spent on interest payment for the long-term external loans was $1.845 billion according to the World Bank.
A further analysis of the World Bank data shows that external debt stock now represents 169 percent of Nigeria’s total exports with debt servicing surging to 17 percent of total exports in 2020. Similarly, by 2020, the ratio of reserves to the country’s external debt stocks stood at 52 percent.