The cost of servicing Nigeria’s external debt dropped to approximately $278 million in February 2025, representing a 2.3% decline over a 12-month period, according to analysts who referenced data from the Central Bank of Nigeria (CBN) in a recent commentary.
Data reviewed by Cordros Capital Limited indicated that the total volume of foreign payments executed by the CBN surged by more than 17% year-on-year, a development largely influenced by debt service obligations, letters of credit, and other international payment commitments.
Specifically, international payments reached $497.91 million in February 2025, rising from $424.96 million in the same month of the previous year. This increase came amid a series of external borrowings and was significantly propelled by higher direct remittance inflows, which constituted 25.2% of total foreign transactions.
The data also revealed a reduction in debt service payments, which accounted for 55.6% of all international transactions, while payments for letters of credit made up 19.2%. Direct remittance transactions recorded a notable year-on-year jump of 220.8%, increasing from $39.15 million in February 2024 to $125.58 million by February 2025.
Cordros Capital noted that this sharp rise was driven by an upsurge in diaspora remittances. Meanwhile, debt service expenditures declined from $283.22 million in February 2024 to $276.73 million in February 2025, reflecting a 2.3% reduction.
In contrast, payments for letters of credit handled by the CBN fell by 6.8% year-on-year, down to $95.59 million from the $102.60 million recorded in the same period of the previous year. This decline was attributed partly to reduced import activity, a result of weakened consumer demand.
Month-on-month data revealed a substantial 24.5% decline in international payments when compared to January’s figure of $630.64 million.
Cordros Capital, in its analysis, projected that international payment volumes are likely to remain high, primarily due to the Federal Government’s ongoing debt repayment and servicing responsibilities.
Additionally, the firm anticipates that improving foreign exchange liquidity will bolster consumer demand over time. This trend is expected to lead to a gradual rise in importation and, by extension, increased payments related to letters of credit and direct remittances.
