Nigeria’s domestic debt hit N77.81 trillion in September 2025, the Debt Management Office has revealed, reflecting the Federal Government’s growing dependence on the local debt market to meet its fiscal obligations.
The figure is striking not only for its scale but also for the pace at which it has grown. Compared to the N1.707 trillion recorded in the second quarter of 2025—covering the April-to-June window—the September reading represents a dramatic jump, underscoring how aggressively Abuja has turned to domestic lenders, institutional investors, and capital markets to plug widening funding gaps.
At the heart of the portfolio are Federal Government of Nigeria Bonds, which account for roughly 80 percent of the entire domestic debt stock, standing at N61.9 trillion. Within that figure, naira-denominated FGN bonds make up the vast majority at N60.64 trillion, with a smaller tranche of US dollar-denominated bonds contributing N1.35 trillion—an instrument that, while domestically issued, carries the added complexity of foreign currency exposure.
Nigerian Treasury Bills follow as the second-largest component, amounting to N12.68 trillion and representing 16.3 percent of total domestic debt. Treasury bills have long served as the government’s preferred tool for managing short-term liquidity, offering flexibility that longer-dated bonds simply cannot provide. Together, bonds and treasury bills account for well over 96 percent of Nigeria’s total domestic debt stock—a concentration that speaks to the government’s preference for tried-and-tested instruments even as it experiments with alternatives.
Those alternatives, while modest in size, offer a window into broader policy ambitions. Sukuk bonds—structured in accordance with non-interest financing principles and typically deployed to fund infrastructure development—stand at N1.29 trillion, reflecting the government’s ongoing courtship of Islamic finance.
Promissory notes, issued primarily to settle verified legacy obligations such as contractor arrears and approved liabilities, total N1.69 trillion, broken down between N431.22 billion in naira-denominated instruments and N1.25 trillion in foreign currency-denominated notes.
At the smaller end of the portfolio, FGN Savings Bonds amount to N97.46 billion—just 0.13 percent of the total—while FGN Green Bonds stand at N62.36 billion, accounting for a thin 0.08 percent. The numbers are modest, but fiscal analysts say their significance should not be measured in naira alone.
“The green bond program and savings bonds are not about volume—not yet,” one Lagos-based debt market analyst noted. “They are about signalling. The government is telling investors, both domestic and international, that it is thinking about sustainability and about broadening who participates in the debt market.”
That broadening has been a stated objective of the DMO for several years. Savings Bonds, with their accessible entry points and retail-friendly design, are explicitly targeted at small savers who would otherwise be shut out of government securities markets.
Green Bonds, meanwhile, are ring-fenced for environmentally sustainable projects spanning renewable energy, climate adaptation, and conservation—a nod to Nigeria’s obligations under international climate frameworks, even as the country navigates the economic contradictions of being a major oil producer.
The composition of the debt portfolio reveals the fundamental logic of the government’s borrowing strategy: long-term instruments like FGN bonds provide stable, predictable funding over extended maturities, while shorter-dated Treasury bills allow the government to respond nimbly to near-term cash flow demands.
The challenge, as debt economists have repeatedly flagged, is that this dual approach—if not managed carefully—can create rollover risks, particularly when a large proportion of short-term instruments mature within narrow windows, placing pressure on the government’s refinancing capacity.
Nigeria’s domestic debt profile has expanded sharply in recent years, driven by rising recurrent expenditure, debt service obligations that have consumed an increasingly large share of government revenue, and the impact of subsidy removals and exchange rate reforms that have reshaped the fiscal landscape since 2023.
The Federal Government has consistently argued that borrowing domestically, as opposed to externally, limits foreign exchange exposure and keeps debt service payments within the naira economy—a position the DMO has defended even as critics warn that domestic borrowing crowds out private sector credit.
What the September 2025 data makes clear is that the government’s appetite for domestic financing shows no sign of abating. With a debt stock approaching N78 trillion and FGN bonds alone eclipsing N61 trillion, the local capital market has become the central pillar of Nigeria’s fiscal architecture—for better or worse.
WHAT YOU SHOULD KNOW
Nigeria’s domestic debt has reached N77.81 trillion as of September 2025, driven overwhelmingly by FGN bonds, which alone account for 80 percent of the total portfolio.
The figures confirm that the federal government has entrenched its dependence on the local debt market to fund its operations, with no clear signs of that trend reversing. While instruments like green bonds and savings bonds signal a desire to diversify and broaden investor participation, they remain marginal in the broader picture.
Nigeria is borrowing more, borrowing faster, and borrowing largely from itself—and the sustainability of that path will depend heavily on whether economic growth and revenue generation can keep pace with a debt stock that is growing at an alarming rate.
