Finance minister flags mounting debt pressures across Global South as Nigeria navigates rising obligations…
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has sounded the alarm over worsening debt conditions across vulnerable economies, revealing that nearly 50 per cent of low-income countries are either in or approaching debt distress.
He delivered the warning at the ongoing Technical Group Meeting of the Group of 24 (G-24) in Abuja, where policymakers and financial leaders gathered to address mounting pressures confronting developing nations.
While Edun did not specify Nigeria’s precise standing under his assertion, the World Bank currently classifies Nigeria as a lower-middle-income country for the 2024–2026 period distinct from the low-income category.
Nevertheless, Nigeria’s own fiscal metrics reflect growing strain. Public debt has continued its upward trajectory since 2023, with estimates placing it near $100 billion — the highest level on record. Meanwhile, the country’s debt-service-to-revenue ratio is projected at roughly 47 per cent in 2025, underscoring the heavy burden of repayments on government finances.
Global South Paying More Than It Receives
Edun noted that annual debt servicing by countries in the Global South now exceeds the combined inflows of Overseas Development Assistance and Foreign Direct Investment from advanced economies.
“The gathering was an opportunity to reshape the development trajectory of the Global South at a time when global risks are converging faster than institutions can respond,” he said.
He added that approximately 25 per cent of Emerging and Developing Economies (EMDEs) have effectively lost access to international capital markets, a development that makes domestic revenue mobilisation more urgent than ever.
Cardoso Pushes for Digital Payment Reform
Also addressing the meeting, Governor of the Central Bank of Nigeria, Olayemi Cardoso, shifted attention to structural bottlenecks in cross-border payments among G-24 members.
He described current systems as “too slow, too costly, and too fragmented,” particularly for developing economies. According to him, global remittance corridors still cost over six per cent on average, with settlement delays stretching several days and compliance hurdles that disproportionately exclude micro, small and medium-sized enterprises (MSMEs).
“Improving cross-border payments is not simply a technical reform it is a macroeconomic and development priority,” Cardoso said, calling for accelerated digitalisation to reduce transaction costs and enhance financial inclusion.
He emphasised that cross-border financial flows now form a critical pillar of global monetary stability, directly influencing remittances, foreign exchange transactions and trade settlements.
Constrained Fiscal Space
Earlier, Iyabo Masha, Director and Head of the G-24 Secretariat, framed the discussions against a backdrop of heightened global uncertainty and structural shifts in the world economy.
For many emerging and developing economies, she said, the challenge has moved beyond short-term recovery to restoring long-term development trajectories while preserving macroeconomic stability in an environment of elevated volatility.
The Abuja meeting comes as developing nations grapple with tightening global liquidity, higher borrowing costs and weaker capital inflows, trends that have narrowed fiscal space and amplified debt vulnerabilities.
For Nigeria, the conversation is particularly timely. While reforms aimed at strengthening revenue collection and stabilising the foreign exchange market are underway, rising debt service obligations continue to test fiscal resilience.
As global financial conditions remain uncertain, policymakers at the G-24 face a delicate balancing act: containing debt risks while mobilising resources needed to finance growth, infrastructure and social development.
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