The Federal Government has defended its proposed $21.7bn external borrowing plan, insisting that the funds are intended to finance critical infrastructure and stimulate economic growth rather than simply increase Nigeria’s debt burden.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, gave the explanation on Wednesday after the Federal Executive Council meeting presided over by President Bola Tinubu at the State House in Abuja.
Oyedele maintained that the proposal should be viewed as a long-term investment programme designed to create economic value, improve productivity and address the country’s infrastructure deficit.
He clarified that the borrowing plan, which has been submitted to the National Assembly for consideration, does not mean the government has already secured the entire amount or will necessarily draw down all the proposed facilities.
According to him, the programme covers projects expected to be implemented over approximately five years.
Transportation Takes the Largest Share
The finance minister disclosed that transportation infrastructure accounts for about $10.6bn of the proposed financing.
Among the projects expected to benefit are sections of the Lagos–Calabar Coastal Highway, the Sokoto–Badagry Highway and the Kano–Kaduna rail project.
The government said the investments are expected to improve connectivity, reduce transportation and logistics costs, facilitate trade and support economic activities across different regions.
The plan reportedly covers 46 projects across 11 sectors, including transportation, healthcare, agriculture, power, education, security and social protection.
World Bank, Development Partners to Provide Funding
Oyedele explained that approximately $7.9bn is expected to come from multilateral and bilateral development partners, with the World Bank accounting for about $5bn.
He said the World Bank component would attract an average interest rate of approximately 2.1 per cent, while other facilities would be sourced from development finance institutions, export credit agencies and commercial lenders.
The minister also stated that the indicative average interest rate for the commercial component was 7.8 per cent, which he said was below the yields on Nigeria’s November 2025 Eurobond.
He attributed the financing terms partly to improvements in Nigeria’s credit ratings.
States and Agencies to Benefit
The minister stressed that the proposed financing was not intended exclusively for the Federal Government.
He disclosed that approximately $4.8bn had been allocated to borrowing by state governments and public agencies, including about $3.3bn earmarked directly for states.
Other funds would be channelled through agencies and development finance institutions, including the Bank of Industry, Development Bank of Nigeria and Transmission Company of Nigeria.
Oyedele argued that the Federal Government serves as the main interface for external borrowing and that the entire amount should not be interpreted as money intended for direct federal government spending.
FG Says Borrowing Can Create Economic Value
Defending the proposal against criticism, Oyedele argued that borrowing could be justified when it finances productive assets capable of generating returns greater than their cost.
He compared the government’s approach with private-sector financing, arguing that large-scale investments would be difficult to execute if businesses and governments had to accumulate all the required funds before commencing projects.
The minister maintained that the priority should be ensuring that borrowed funds generate measurable economic benefits rather than treating all borrowing as inherently harmful.
However, the proposal has renewed debate over Nigeria’s debt burden, the cost of external financing and the government’s ability to ensure that infrastructure investments deliver tangible benefits to citizens.
National Assembly to Consider Proposal
President Bola Tinubu has asked the National Assembly to approve the proposed external facilities, which comprise approximately $20.52bn and €1.045bn.
The request has been referred for legislative consideration, meaning the proposed financing remains subject to the required approval process.
Lawmakers will need to examine the loan terms, intended projects, repayment obligations and potential implications for public finances before deciding on the request.
The debate is expected to centre on whether the proposed investments can generate sufficient economic returns while ensuring that Nigeria remains capable of meeting its debt obligations.
