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Nigeria Guzzles Chinese Loans, Debt Threatens Economy
Nigeria is guzzling China loans and at last count Chinese credit accounts for 80% of all bilateral lending to Nigeria.
Debt Management Office (DMO), the government agency established to centrally coordinate the management of Nigeria’s debt confirmed this in its recent data.
China provides loans to build railways, power plants and airports, helping to bridge a huge infrastructure gap in Africa’s largest oil producer.
However, lending from China makes up only 3% of Nigeria’s total debt stock of $81 billion.
But, Ike Brannon, contributor for Forbes Magazine, has warned that Nigeria’s deceptively large external debt could threaten the economy.
His article is reproduced below
As Nigerian President Muhammadu Buhari announces his new Cabinet, his post-election pronouncements have made it clear that a core priority of his new government will be to boost the Nigerian economy. Unfortunately, the President’s proposals during his campaign and since have amounted to little more than tinkering at the edges. The reality is that the country needs needed fundamental and far-reaching reforms in order to address deep-seated structural problems with the country’s economy. The story of Nigeria’s coming economic crisis has not yet gained global attention, but attention must be paid to it.
President Buhari’s policy missteps stem first and foremost from a mistaken diagnosis of the problem, and there does not appear to be any political acceptance in Abuja of the degree of severity. The data highlighting the structural weaknesses of the Nigerian economy are depressingly familiar – despite decades of attempts to diversify, Nigeria remains dependent on oil for 90% of its export earnings, which owes partly to the fact that almost two-thirds of the economy remains in the informal sector. The large informal sector also causes the country’s tax to be remarkably small–tax revenue last year was less than ten percent of GDP. What’s more, economic growth has remained sluggish despite a rapidly growing population.
The country’s Central Bank recognizes the country’s economic morass and has taken steps to boost domestic lending, but its financial institutions are wary of increasing their loan portfolios –a history of non-performing loans serves as a cautionary tale. Instead, banks are increasingly buying Nigerian bonds instead, which starves domestic businesses of capital. Another problem is that having a plethora of Nigerian banks holding substantial portions of Nigerian sovereign debt represents a systemic risk, especially given the increasing debt distress in the country. The Central Bank has now begun to restrict the purchases of these securities by banks, a sensible move that should be accelerated further.
Nigeria’s biggest economic problem, though – and the issue that requires real political acceptance from Buhari’s new government – is the country’s growing public debt. Since assuming office in 2015 President Buhari’s governments have added considerably to the nation’s debt, which now exceeds $85 billion. In essence, the nation’s debt is about where it was in 2005-06, just before Nigeria benefited from massive debt relief as part of a program coordinated by the Paris Club, IMF, World Bank and the African Development Bank. To have squandered the debt reduction in just fourteen years and have no tangible economic progress to show for it is beyond disappointing.
Paris-based sovereign debt expert Andrew Roche has pointed out that while the country’s debt as a proportion to GDP is a reasonable twenty percent, debt servicing costs make up fully two-thirds of retained government revenue, a startlingly high figure and a datum its government goes some lengths to de-emphasize.
Without an honest and frank government acceptance of the situation, Nigeria’s chances of escaping its self-inflicted debt trap are vanishingly small.
Another problem facing the country is that while most developing countries take advantage of concessionary financing from the World Bank or other international institutions, Nigeria’s debt profile is now increasingly made up of commercial debt. Its recent Eurobond issuances in London, for example, came at a relatively high yield, which makes its economy especially vulnerable to external shocks, such as a sustained drop in oil prices.
The UK Government has announced the appointment of Mr Peter Vowles as the next British High Commissioner to the Federal Republic of Nigeria.
Mr Vowles succeeds Dr Richard Montgomery CMG and is expected to take up his post in Abuja in September 2026. Dr Montgomery remains in post until that time.
Mr Vowles brings extensive diplomatic and development experience to the role, having served as His Majesty’s Ambassador to Zimbabwe from 2023 to 2026 and previously as Ambassador to Myanmar from 2021 to 2022.
He has held senior leadership positions across the FCDO and its predecessor department DFID, including as Transformation Director and Director for Asia, Caribbean and Overseas Territories.
Earlier in his career, Mr Vowles worked in international development across South Asia, Central Africa and East Africa, including postings in Bangladesh, India, the Democratic Republic of Congo and Kenya. He began his career in Zimbabwe, where he worked in education and development.
Peter Vowles said: “I am honoured to be appointed as British High Commissioner to Nigeria. Nigeria is a country of immense importance to the United Kingdom, and I look forward to working closely with Nigerian partners to strengthen our relationship across trade, development and security.”
World Bank has ranked the Apapa and Tin Can Island Port complexes in Lagos among the world’s 20 most improved ports in its 2025 Container Port Performance Index (CPPI), released in June 2026.
The ranking places both ports in the “Top 20 Port Improvement Since 2020” category, reflecting significant gains in operational efficiency and vessel turnaround time.
The CPPI is a global benchmark used to assess the efficiency of container ports based on factors such as cargo handling speed, ship turnaround time and overall logistics performance.
According to the report, the improvement highlights ongoing reforms and modernization efforts within Nigeria’s maritime sector.
The Managing Director of the Nigerian Ports Authority (NPA), Mr Abubakar Dantsoho, attributed the recognition to ongoing policy reforms and infrastructure upgrades in the sector.
He said the development reflects the impact of economic policies of President Bola Tinubu and the support of the Minister of Marine and Blue Economy, Mr Adegboyega Oyetola.
“With the investor-friendly policies of President Bola Ahmed Tinubu providing the impetus for increased investment to drive our port infrastructure and equipment modernisation programme, coupled with the unflinching support of the Honourable Minister of Marine and Blue Economy, Adegboyega Oyetola, we have all it takes to further enhance trade facilitation, improve competitiveness and boost the national economy,” he said.
The NPA said the recognition is expected to strengthen investor confidence in Nigeria’s maritime sector and enhance the country’s position as a regional trade and logistics hub.
It noted that improvements in port operations are already contributing to increased efficiency in cargo movement and reduced delays at key terminals.
The authority also pointed to ongoing efforts to modernise port infrastructure and expand digital systems aimed at improving service delivery.
Earlier in February 2026, the NPA said the federal government had intensified efforts to position Nigeria as a leading maritime destination through port rehabilitation and modernization projects.
It also highlighted public-private partnership initiatives, including developments at the Lekki Deep Sea Port, as part of broader reforms aimed at improving efficiency and attracting investment.
The CPPI ranking is expected to further boost Nigeria’s maritime profile and encourage additional investment in the sector.
As digital payment adoption continues to grow across Nigeria and emerging markets, the next phase will depend not just on innovation, but on the strength, reliability, and trustworthiness of the infrastructure behind it.
While the ecosystem has made clear progress in recent years, trust remains a critical issue for users, businesses, and operators alike. Questions around resilience, security, interoperability and transaction reliability continue to shape how the market evolves and how confidently digital payments can scale.
These issues will be central to the deliberations at Digital Pay Expo 2026, where fintech leaders, payment operators, and other ecosystem stakeholders will gather under the theme, “Seamless Digital: Fostering Pan-African Market Expansion in the Era of AI.”
PalmPay’s participation reflects its continued commitment to building trusted and scalable payment infrastructure, while contributing to the broader industry efforts to strengthen systems, standards, and partnerships needed to support long-term ecosystem growth.
Speaking ahead of the event, Olorunfemi Hanson, Head of Marketing and Communications at PalmPay Nigeria, said: “As the financial services ecosystem continues to grow, trust and reliability become even more important.
“The industry’s next phase will be shaped not only by innovation, but by the strength of the infrastructure supporting it. Digital Pay Expo provides an important platform to address the resilience, interoperability, and trust issues that will shape the future of digital payments growth across Africa.”
The event, scheduled to be held from the 17th to the 18th of June, 2026, will feature Chika Nwosu, Managing Director of PalmPay Nigeria, alongside other distinguished guests, including the Director-General, Payment System Management Department (PSMD), Central Bank of Nigeria. The event will examine how the industry can balance innovation, regulation, and scalability while strengthening trust across the digital payments value chain.
For PalmPay, this event reinforces its role in supporting a more resilient, secure and scalable payments ecosystem for Nigeria and emerging markets more broadly.
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