Nigeria’s debt to Gross Domestic Product (GDP) ratio has been on the increase over the last 8 years. It has increased significantly from 12.54% in 2014 to 21.34% in 2020.
The higher the debt to GDP ratio of a country, the less likely it is for a country to pay back its loans and the higher its risk of default.
A study by the World Bank revealed that if the debt to GDP ratio of a country exceeds the 77% threshold for developed nations and 64 percent in emerging markets, it significantly slows down real economic growth.
Dataphyte’s Advisory Note “Nigeria’s Post Oil Economy: Going the Housing Consumer Credit Path”provides more insight on this subject.