The Political Economy of Nigeria’s Sovereign Default Risk and Its Foreign Policy Implications

This dissertation examines the political economy of Nigeria's sovereign creditworthiness and default risk, developing an original analysis of how Nigeria's fiscal trajectory, oil revenue dependency, and institutional governance interact to generate credit risk signals that constrain Nigeria's foreign policy autonomy and diplomatic credibility. Sovereign credit risk is not merely an economic phenomenon but a political and diplomatic one: states with deteriorating creditworthiness face higher costs of external borrowing, reduced leverage in financial diplomacy, and diminished credibility as development partners and regional leaders. Drawing on the political economy of sovereign debt, financial power theory, and diplomatic credibility frameworks, this study develops a mixed-methods analysis of Nigeria's credit risk dynamics from 2015 to 2024, combining quantitative analysis of sovereign bond spreads, credit rating agency assessments, and debt service ratios with qualitative analysis of the diplomatic consequences of credit deterioration for Nigeria's relationships with the IMF, World Bank, and bilateral creditors. Primary data include Debt Management Office records, Central Bank of Nigeria monetary reports, Moody's, S&P, and Fitch rating reports, and interviews with sovereign bond investors and Nigerian treasury officials. The theoretical contribution introduces a framework of fiscal diplomatic capacity to describe the threshold conditions under which sovereign fiscal deterioration begins to constrain foreign policy options, with original hypotheses about the relationship between credit rating transitions and the scope of economic diplomacy initiatives Nigeria is able to pursue. Keywords: sovereign debt, credit risk, Nigeria, financial diplomacy, fiscal capacity.