Every Naira of Debt Service Shrinks the Fiscal Space for Climate Adaptation

In the first nine months of 2025, Nigeria's federal government spent ₦12.52 trillion servicing debt, about 67 percent of its ₦18.63 trillion in retained revenue over the same period, according to the Budget Office of the Federation's own Q3 2025 Budget Implementation Report. That is not simply a debt statistic. It is a measure of how much room is left in the budget for everything else. And the number moves around a lot depending on which period you look at. In January 2025 alone, debt service briefly consumed 144 percent of that month's revenue, according to the Central Bank of Nigeria. In the first quarter of 2025 it stood at 113 percent. The point is not that any single figure is the permanent truth. It is that whichever window you pick, debt service in Nigeria today is not a modest line item. It is the single largest claim on the government's cash.

Nigeria has made real, specific commitments on climate. Its Third Nationally Determined Contribution, submitted to the UNFCCC in September 2025, estimates that meeting the country's climate goals will require US$337 billion by 2035, of which US$141.5 billion is earmarked specifically for adaptation: flood defences, drought resilience, food security, and climate-proofed infrastructure. Against that need, actual tracked adaptation finance reaching Nigeria came to roughly US$0.74 billion, covering an estimated 6 percent of what the country needs, according to the Climate Policy Initiative's 2025 landscape assessment of Nigerian climate finance. The same assessment puts Nigeria's overall annual climate finance gap, across adaptation and mitigation combined, at around US$27.2 billion. Nigeria's own National Council on Climate Change separately estimated the gap at over US$15 billion a year in September 2025. The exact number moves depending on what is being measured, but every credible estimate lands in the same place: a financing shortfall measured in the tens of billions of dollars a year. Here is the comparison that makes the fiscal squeeze concrete. In 2021/22, Nigeria's total tracked climate finance, from every source, domestic and international, public and private, came to about US$2.5 billion. That was almost exactly equal to what the country spent that same year servicing its foreign debt: roughly US$2.3 billion, according to the Debt Management Office's own figures. Two categories of spending that should have nothing to do with each other turned out, that year, to be roughly the same size. That is what fiscal crowding-out looks like in practice: not one naira being redirected from climate to debt, but the two competing for the same limited pool of government cash, with debt service currently winning by a wide and growing margin.

It would be easy, but inaccurate, to say Nigeria's official debt figures simply hide things. They don't, in the sense of active concealment. The more accurate and more useful framing is this: Nigeria's headline public debt statistics do not capture every fiscal exposure that matters for judging whether new borrowing, including climate borrowing, is sustainable. Some of this is already better than commonly assumed. The Debt Management Office does maintain a dedicated Sub-National Debt Management function and does publish quarterly, state-by-state figures on domestic debt, Lagos, Delta, Rivers, and every other state are individually broken out in DMO's own reporting. The gap here isn't absence of reporting. It's that DMO publishes largely what states submit, without a systematic, independent verification process behind those numbers. The more consequential gaps sit elsewhere. Legacy pension obligations owed to civil servants from before Nigeria's 2004 pension reform remain a real government liability but sit outside the headline debt figure. Contingent liabilities, government guarantees, on-lent loans to state-owned enterprises, obligations that only become actual debt if something goes wrong, are disclosed selectively rather than as a standing, consolidated account. NNPC's liabilities, documented independently by NEITI at billions of dollars, sit outside the DMO's reported debt stock entirely, even after the Petroleum Industry Act introduced audited financial statements for NNPC Ltd. None of this is necessarily illegal or secret. It is better described as a fiscal risk disclosure gap: exposures that international standards expect to be counted and quantified, but that Nigeria's current reporting keeps narrative, scattered, or simply absent. This matters directly for climate finance. When international lenders and climate funds, which range from concessional lenders to pure grant-makers to blended-finance vehicles, assess how much more Nigeria can safely take on, they need a genuinely complete picture of existing exposure. An incomplete picture cuts both ways: it can price in unnecessary risk and push financing costs up, or it can let new borrowing proceed without anyone, including Nigeria's own government, actually knowing whether the country can carry it. There's a smaller, closer-to-home version of the same problem worth naming. Even the climate-specific money Nigeria does allocate isn't always verifiably used. A 2026 review of budget implementation records by Sahara Reporters found that Ondo State received roughly ₦1.07 billion in Ecological Fund allocations for flood and erosion control in 2025, and spent none of it, a zero percent implementation rate, despite repeated national flood warnings. The problem, in other words, isn't only that too little climate money exists. It's that even the money that does exist isn't reliably tracked to an actual outcome.

Nigeria's climate finance architecture actually contains a legal instrument that should be central to this conversation, and it has sat almost entirely unused. Section 15 of the Climate Change Act 2021 established a National Climate Change Fund, meant to be financed through budgetary appropriations, grants, and revenue tied to Nigeria's climate progress. The Fund existed on paper for more than three years without being operational. The National Council on Climate Change only announced plans to activate it in April 2025. On the debt-disclosure side, the Fiscal Responsibility Act 2007 is often described as toothless, but that overstates the problem in a way that actually makes it harder to fix. The Act already requires the government's Fiscal Strategy Paper to include "a statement describing the nature and fiscal significance of contingent liabilities and quasi-fiscal activities." The Fiscal Responsibility Commission already has the stated power to compel disclosure of information on public revenue and expenditure, and to investigate suspected violations. The real gap is narrower and more fixable than "no law exists": the disclosure requirement is worded as a qualitative narrative, not a mandate for actual quantified figures, and the Commission's power to sanction non-compliance, once a violation is found, is limited in practice. A commission can identify a problem and still have no real lever to make anyone fix it.

Four specific, achievable changes would do more than any new institution or fresh climate pledge: First, amend the Fiscal Responsibility Act's Fiscal Strategy Paper requirement so that the "statement" on contingent liabilities becomes a quantified schedule, specific naira figures for government guarantees, on-lent SOE loans, and PPP-related exposures, not a narrative paragraph. Second, give the Fiscal Responsibility Commission's existing power to compel disclosure of real enforcement behind it: graduated, defined sanctions for agencies that ignore a compliance order, rather than a power to identify problems with no consequence attached. Third, operationalise the Climate Change Act's National Climate Change Fund with a binding reporting requirement, so that whatever revenue does flow into it (budgetary appropriations, climate-linked grants, carbon-related fees) is tracked separately and publicly, rather than dissolving into general fiscal opacity the way ordinary Ecological Fund allocations currently do. Fourth, Nigeria should adopt something close to Ghana's model under Sections 71 and 72 of its Public Financial Management Act, which require Ghana's finance ministry to publish detailed public debt information through annual reports and quarterly statistical bulletins on a fixed schedule. This is not a claim that Ghana has solved its own debt challenges. It is a genuinely useful statutory mechanism: a legal, not just administrative, obligation to publish comprehensive debt data on a defined cadence, something Nigeria's own DMO bulletin currently does by habit rather than by binding law.

Debt service is not inherently the enemy of climate investment. The real problem is borrowing, and spending, without enough fiscal space, transparency, or verification discipline to know what the next obligation will actually cost, or whether the money already allocated for resilience is doing anything at all. Nigeria cannot plan sustainable climate finance if it cannot fully and transparently map its existing fiscal obligations, and it cannot demonstrate to lenders and climate funds that new borrowing is safe if its own contingent liabilities remain narrative rather than counted. When advocacy groups, youth organisations, and civil society push the National Assembly, the DMO, and the Budget Office to close these specific legal gaps, they are not asking for cleaner spreadsheets for their own sake. They are asking for the fiscal room, and the verified information, that a flood-prepared, climate-resilient Nigeria will actually need.