By John Ikani
Nigeria, often perceived as over-burdened by debt, has surprised many by securing the second-lowest debt ranking among African nations, according to data released by the International Monetary Fund (IMF).
This recognition underscores the importance of using metrics like the debt-to-GDP ratio when evaluating a country’s financial health. Lower ratios signal stability, whereas higher ones raise concerns about managing debt effectively.
Tanzania, lauded for its cautious approach to borrowing, takes the top spot with a debt-to-GDP ratio of 41.8%. This achievement reflects their sound financial decisions.
Following closely behind is Nigeria with a ratio of 41.3%, a testament to its crucial role in Africa’s economic engine, despite holding a sizable external debt of $41.59 billion (approximately N31.98 trillion) as of December 2023.
Nigeria’s relatively manageable debt levels can be attributed to several factors, including a diversified economy and effective debt management strategies.
The Debt Management Office (DMO) reports Nigeria’s total debt to be roughly N97.34 trillion.
Through strategic debt management, Nigeria has achieved both economic stability and increased investor confidence, leading to a favourable debt position despite its vital role in Africa’s economic landscape.
Countries in Africa with lower debt levels, like Nigeria, not only become more attractive to investors but also have a higher chance of receiving additional financial aid from global and local lenders due to their reduced economic risk.
Nigeria’s superior ranking compared to nations like Cameroon, Chad, Comoros, Equatorial Guinea, Guinea, Ethiopia, Botswana, and the Democratic Republic of Congo further solidifies its strong debt standing.
