By: Amadi Vincent Uzoma
Despite common perceptions of high indebtedness, Nigeria has been identified by the International Monetary Fund (IMF) as the second least indebted country in Africa.
This assessment underscores the importance of key indicators like the debt-to-GDP ratio in evaluating a country’s financial well-being. Lower ratios indicate stability, while higher ratios raise concerns about the sustainability of the debt.
Tanzania’s leading position with a debt-to-GDP ratio of 41.8% demonstrates its careful management of debt. Nigeria closely follows with a ratio of 41.3%, underscoring its significance in Africa’s economic landscape, despite its external debt reaching $41.59 billion or N31.98 trillion as of December 2023.
Nigeria’s relatively modest debt load can be attributed to various factors, including its diverse economy and effective debt management practices.
According to the Debt Management Office (DMO), Nigeria’s total debt amounts to approximately N97.34 trillion.
Through prudent debt management, Nigeria has maintained stability and bolstered investor confidence, contributing to its positive debt position despite its substantial role in the continent’s economy.
African countries with limited debt burdens are more attractive to investors and are likely to receive increased support from international and domestic creditors, thus posing fewer economic risks for lenders.
Nigeria’s placement ahead of countries like Cameroon, Chad, Comoros, Equatorial Guinea, Guinea, Ethiopia, Botswana, and the Democratic Republic of Congo further confirms its advantageous debt position.
