72% of Revenue Gone: Nigeria’s Debt Problem Is Getting Harder to Ignore
Nigeria’s public finances are under growing strain as debt servicing continues to absorb a disproportionate share of government revenue. In the first seven months of 2025, nearly 72 percent of all revenue earned by the Federal Government was used to service debt, leaving limited room for development spending and capital investment.
This level of debt pressure highlights a deepening fiscal imbalance. While borrowing has helped bridge revenue gaps in recent years, the cost of servicing those loans is now crowding out spending on infrastructure, housing, and other productive sectors of the economy.
A Budget Under Pressure
Between January and July 2025, the Federal Government generated just under ₦14 trillion in revenue. Over the same period, debt service obligations climbed to almost ₦10 trillion. This means that for every ₦100 earned, about ₦72 was immediately committed to repaying interest and principal on existing loans.
When combined with personnel costs, total recurrent spending exceeded revenue during the period. This dynamic forces the government to rely even more heavily on borrowing to fund basic operations, reinforcing a cycle of rising debt and growing servicing costs.
Why Debt Service Is Rising So Fast
Several factors are driving the surge in debt service:
Higher interest rates, both domestically and globally, have increased the cost of refinancing existing obligations.
Currency depreciation has raised the naira cost of servicing foreign-denominated debt.
Revenue underperformance, particularly from oil exports, has reduced the government’s ability to absorb these costs without fiscal stress.
As revenue growth lags behind debt obligations, the share of income devoted to servicing loans continues to rise.
Implications for Housing and Infrastructure
For the housing sector, the consequences are significant. High debt servicing limits the government’s capacity to fund large-scale housing programmes, urban infrastructure, and mortgage support schemes. Capital budgets are often the first to be cut or delayed when fiscal pressure mounts.
This environment shifts more responsibility to the private sector, where developers face higher borrowing costs, tighter credit conditions, and weaker consumer purchasing power. The result is slower project delivery, higher housing prices, and reduced affordability, particularly in major urban centres like Lagos and Abuja.
A Shrinking Fiscal Space
Spending such a large share of revenue on debt leaves little room for economic stimulus or long-term investment. Roads, power, water, housing, and urban renewal projects compete for a shrinking pool of funds after recurrent obligations are met.
Over time, this can weaken economic growth, limit job creation, and reduce the government’s ability to address Nigeria’s housing deficit, which already runs into the tens of millions of units.
What Needs to Change
Reversing this trend will require difficult policy choices. Improving non-oil revenue collection, broadening the tax base, and boosting economic productivity are essential to easing fiscal pressure. Equally important is ensuring that new borrowing is tied to projects that generate measurable economic returns.
Without a shift in strategy, debt service will continue to dominate government finances, leaving development goals increasingly out of reach.
For Nigeria’s housing market and broader economy, the message is clear: sustainable growth depends not just on how much the government borrows, but on how effectively it manages and grows its revenue base.