Operators warn that Nigeria’s growing reliance on short-term investments and rapid federal borrowing now driving public debt to N152.39 trillion is creating deep structural risks that threaten long-term fiscal stability.
Market operators have raised concerns over Nigeria’s rising dependence on short-term instruments such as treasury bills and commercial papers at a time when public debt has climbed to N152.39 trillion, warning that the trend is tightening structural pressures and threatening long-term fiscal stability. Despite a slight decline in the combined debt of the 36 states and FCT from N11.47 trillion in Q2 2024 to N11.32 trillion in Q2 2025 federal borrowing continues to accelerate, including plans for an additional $2.35 billion Eurobond.
Executive Director of Halo Capital, Dr. Paul Uzum, linked investor preference for short-term securities to economic volatility, noting that an inverted yield curve where one-year bills yield 19% against 15.5% on 10-year bonds signals uncertainty, adding that “short-term yields adjusted rapidly to inflation.” Independent investor Amaechi Egbo cautioned that the dominance of fast-maturing instruments was creating “a dangerous mismatch” between Nigeria’s long-term development needs and the nature of available capital.
While several states have significantly reduced their debt burdens, federal borrowing reached N17.36 trillion between January and October 2025, pushing the debt-to-GDP ratio above 40% and raising debt-servicing costs to a projected N15.81 trillion in the 2025 budget. Analysts warn that without reforms and incentives for long-tenor financing, Nigeria risks sacrificing long-term development for short-term returns.