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The Challenges Facing the New Leader of Africa’s Largest Economy are Simply Enormous

A long-term solution to Nigeria’s debt problem is to explore new sources of revenue. To change the current narrative about how risky Nigeria is, the Tinubu administration should introduce policies that improve Nigeria’s economic fundamentals. The country’s external debt stock – what it owes non-residents – was US$41.69 billion in 2022. Multilateral lenders accounted for almost half of this figure. Eurobonds accounted for about 38% of Nigeria’s external debt. Exim Bank of China accounted for US$4.3 billion, or 86% of the $5 billion in bilateral debt. The country’s public debt stock – what the government owes in total – was about US$100 billion in 2022. A starting point is to invest in physical capital and infrastructure (especially roads and electricity); provide access to capital for micro, small and medium-sized enterprises; and support agricultural development. One strategy is to resuscitate the moribund factories in Nigeria and promote agro-processing industries, so that the economy would generate more revenue from non-oil sources to finance government spending and projects.