In October 2005 Nigeria concluded the largest debt cancellation in African history. Of the $30 billion owed to the Paris Club of bilateral creditors, $18 billion was written off and $12 billion paid in cash from oil revenues. Finance Minister Ngozi Okonjo-Iweala and Central Bank Governor Charles Soludo were the lead negotiators.
The deal made Nigeria the first low-income country to fully exit Paris Club debt. The cash source was the 'Excess Crude Account' built up in 2003–05 — savings from the gap between the budget benchmark oil price and the actual market price. The political deal was Tony Blair's: he made African debt relief a signature of his 2005 G8 Presidency at Gleneagles, and Nigeria was the test case.
Nigeria's debt-to-GDP ratio fell from 64% in 2004 to under 12% in 2006. By 2024, after two decades of fresh borrowing under Yar'Adua, Jonathan, Buhari and Tinubu, it was back above 50%.
Figure 1
Nigeria's external debt stock, 2000–2007 (US$ billion)
The Okonjo-Iweala deal of October 2005 paid Paris Club $12 bn cash for an $18 bn write-off. By April 2006 Nigeria's Paris Club debt was zero.