Nigeria spent nearly $1 billion servicing its foreign loans in the first two months of 2026, underscoring the growing burden of external debt repayments as capital outflows from the economy continued to rise.
According to the Central Bank of Nigeria (CBN)’s February 2026 Economic Report, the country spent $440 million on foreign debt servicing in January and $480 million in February, bringing the total debt servicing bill for the two months to $920 million.
The report showed that total capital outflows increased significantly to $2.75 billion in February from $1.63 billion recorded in January. The CBN attributed the increase mainly to higher capital transfers, although loan repayments also contributed to the rise.
According to the apex bank, capital transfers rose by 91.53 per cent to $2.26 billion, while loan repayments increased from $440 million in January to $480 million in February. Dividend repatriation, however, declined during the review period.
The CBN stated that capital transfers accounted for 82.18 per cent of total capital outflows in February, while loan repayments made up 17.45 per cent, highlighting the increasing cost of servicing Nigeria’s foreign debt.
An analysis of the report showed that the banking sector accounted for the largest share of capital outflows at 45.96 per cent, followed by the financing sector with 26.10 per cent, oil and gas at 15.72 per cent, telecommunications at 3.51 per cent, and production/manufacturing at 2.62 per cent.
The report also revealed that Lagos State accounted for 62.90 per cent of total capital outflows, while the Federal Capital Territory (FCT) contributed 37.04 per cent, with Ondo, Ogun and other states making up the balance.
Despite the increase in capital outflows, the CBN maintained that Nigeria’s external sector remained resilient, recording a higher trade surplus and increased capital inflows due to lower import bills and stronger capital transfers. The apex bank also disclosed that the country’s external reserves rose from $48.88 billion in January to $50.12 billion in February, providing an import cover of 9.61 months, well above the international benchmark of three months.
The development comes after Nigeria spent about $5.21 billion servicing external debt obligations in 2025, accounting for more than 72 per cent of the country’s total international payments during the year, according to CBN data.
Meanwhile, the International Monetary Fund (IMF) has projected that Nigeria’s public external debt will increase from $51.9 billion in 2025 to $72.6 billion by 2027, representing a 39.9 per cent increase within two years. The Fund also forecast that public external debt service would rise, while interest payments on public debt are expected to increase from $2 billion in 2025 to $3 billion by 2027.
The IMF further projected that debt servicing would continue to consume more than half of the Federal Government’s revenue over the period, reflecting the mounting pressure on the country’s public finances.
Commenting on concerns over government borrowing, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the focus should not be on the size of the debt alone but on how the borrowed funds are utilised. According to him, borrowing to finance productive investments that generate returns above the cost of capital is a rational economic decision rather than an indication of fiscal irresponsibility.
