How Nigeria’s $5.7bn China Debt Exposure Raises Questions Over Fiscal Accountability, Debt Governance

Nigeria’s growing external debt obligations are drawing renewed attention to public-sector accountability, borrowing transparency and fiscal risk management, following World Bank figures showing that the country owed China $5.67bn in bilateral loans as of December 2025.

The World Bank’s International Debt Report 2026 identified China as Nigeria’s largest bilateral creditor, accounting for approximately 85 per cent of the country’s $6.68bn bilateral debt to foreign governments. France followed with $774m, while other bilateral creditors accounted for $237m.

The figures highlight the importance of stronger oversight of government borrowing, particularly around loan approvals, utilisation, repayment obligations and the management of publicly guaranteed liabilities.

Nigeria’s total external debt stock increased by 6.6 per cent to $145.02bn in 2025, from $136.05bn in 2024. Of this amount, $62.4bn represented public and publicly guaranteed external debt, while private non-guaranteed and short-term external obligations stood at $54.48bn and $28.14bn respectively.

From a compliance and governance perspective, the concentration of bilateral exposure in a single creditor country reinforces the need for robust debt disclosure, effective legislative scrutiny, transparent procurement processes and regular monitoring of projects financed through external loans.

Public authorities must also ensure that borrowed funds are applied strictly to approved purposes, supported by verifiable project records and subjected to independent audit and performance assessments.

The World Bank reported that Nigeria’s debt service-to-exports ratio rose to 19 per cent in 2025, while external debt-to-exports stood at 212 per cent. These indicators underscore the importance of assessing repayment capacity before additional borrowing commitments are undertaken.

The development comes as the Federal Government seeks legislative approval for $7.707bn in additional external financing for the 2026 budget.

Ultimately, sustainable borrowing requires more than securing favourable loan terms. It demands institutional accountability, transparent reporting, effective risk controls and demonstrable value for money to protect public finances and future generations.