President Bola Tinubu has sent a request to the House of Representatives seeking approval to access aggregate external capital of $2.347 billion.
Tinubu in a separate letter to Speaker Abbas Tajudeen at plenary on Tuesday also sought the resolution of the House to approve the issue of a stand-alone debut Sovereign Sukuk of up to $500 million in the ICM with or without credit enhancement (Guarantee).
This brings the combined request to $2.84 billion, comprising $2.347 billion external borrowing and $500 million in international sovereign Sukuk issuance.
According to the first letter, the international borrowing of $2.34 billion is to be accessed through any of the following option(s) in the International Capital Market (ICM): Issuance of Eurobonds, Loan Syndications, Bridge Finance Facility from Bookrunners and Direct Borrowing from International Financial Institutions.
This comprised of New External borrowing of N1.843 trillion, at the budget exchange rate of N1,500/$ in the 2025 Appropriation Act for the part-financing of the budget deficit and refinancing of $1.118billion Eurobonds.
The President’s request for approval of a fresh $2.84 billion foreign borrowing and Sukuk issuance has sparked varied reactions across Nigeria’s political and economic landscape.
As of March 31, 2025, Nigeria’s total public debt stock stood at approximately N149.39 trillion, comprising N70.63 trillion in external debt and N78.76 trillion in domestic debt.
Stakeholders React
Commenting on the development, the director/CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf emphasized the need to assess the current proposal within the framework of the medium-term expenditure plan approved by the National Assembly.
He said it is crucial to determine if this proposal aligns with the funding strategy outlined in the current budget, which includes a deficit financing approach.
According to Yusuf, this financing strategy involves a combination of external loans and domestic debt. Therefore, it is essential to evaluate whether this proposal fits within that structure. If it does not, it raises some important concerns that we must address.
Also speaking, chief partner at SPM Professionals, Dr. Paul Alaje, said, “The new borrowing is perhaps part of the budgetary plan. However, with the announcement that we have met our revenue target, we should have a slow energy towards borrowing because borrowings always come at a cost, especially when the borrowings are commercial in nature. Once it’s not bilateral or multilateral, they usually come at a significant cost. Any money that is borrowed should have direct impact and should go into infrastructure, namely energy, educational infrastructure, health infrastructure, road and rail. Other than that, we discourage borrowing.”
“A key area of focus should be debt sustainability. It is vital to ensure that our fiscal capacity remains adequate to support essential government projects and operations. We must pay attention to our level of debt exposure to avoid overwhelming debt service burdens that could hinder future financial flexibility.
“The House of Representatives is kindly invited to issue its Resolution allowing the Government to raise the amount through any of the following options: Issuance of Eurobonds, Bridge Finance Facility from Bookrunners, Loan Syndication and Direct Borrowing from International Financial Institutions.
“The House of Representatives may wish to note that Eurobonds of USD1,118,352,000.00 (7.625% US$1.118BN NOV 2025) issued in the ICM on November 21, 2018, with an original tenor of 7 years, will mature on November 21, 2025.
“The plan is to refinance the maturing Eurobonds through issuance of Eurobonds, Bridge Finance Facility from Bookrunners, Loan Syndication, or Direct Borrowing from International Financial Institutions, if necessary to avoid default.
“This is a standard practice in debt capital markets, including the ICM. The proposal is for the House of Representatives to issue its Resolution authorising the FGN to refinance the Eurobonds, accordingly.”
“Based on the presentations in Paragraphs 2 and 3, the aggregate amount proposed to be raised in the ICM either through Issuance of Eurobonds, Bridge Finance Facility from Bookrunners, Loan Syndication and Direct Borrowing from International Financial Institutions or combination of the options for which Resolution of the House of Representatives is being sought is USD2,347,465,000.00.
“Whilst exploring all the options, the plan is to focus on the Issuance of Eurobonds, and we believe that Nigeria, being a regular issuer of Eurobonds in the ICM could raise the proposed amount, subject to market conditions. The House of Representatives may wish to note that because Eurobonds Issuance is a market-based transaction, the terms and conditions can only be determined at the time of the transactions, and they will be subject to prevailing market conditions.
“The Federal Ministry of Finance (FMF) and the Debt Management Office (DMO) will work with the Transaction Advisers to secure the most favourable terms and conditions. The Indicative Terms and Conditions for Issuance of USD2.347 billion Eurobonds in the ICM is attached as Annexure 1. Meanwhile, it is expected that the pricing of the new Eurobonds will reflect the Yields on Nigeria’s Eurobonds trading in the ICM at the time of Issuance, while Tenors will be guided by investors’ preferences, price and the DMO’s liability management strategy.”
The letter further reads: “The House of Representatives is invited to issue its Resolution authorising the Issuance of a stand-alone debut Sovereign Sukuk of up to USD500m in the ICM based on the following reasons, amongst others:
“The FGN has recorded considerable success in the Issuance of Sukuk in the domestic capital market for the development of critical infrastructure projects across the country. Between September 2017 and May 2025, the DMO has raised N1,392.557 trillion through Sukuk in the domestic capital market to fund critical road infrastructure projects.
“There is the need to pool resources from external sources to complement domestic issuance to help bridge infrastructure funding gaps; and, it is imperative to open new sources of funding for the FGN, and thereby diversify investor base, as well as deepen the FGN Securities market.
“The proposal is for the House of Representatives to approve the issuance of a stand-alone debut Sovereign Sukuk with or without credit enhancement (Guarantee) from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank (IsDB) Group.
“Based on the foregoing, I respectfully request the House of Representatives to pass a Resolution: to raise external capital in the sum of USD2,347,465,000.00 comprised of New External Borrowing in the 2025 Appropriation Act (USD1,229,113,000.00) and refinancing of maturing Eurobonds (USD1,118,352,000.00), through any of the following option(s).
“Issuance of Eurobonds, Bridge Finance Facility from Bookrunners, Loan Syndication and Direct Borrowing from International Financial Institutions.
“To issue a debut stand-alone Sovereign Sukuk of up to USD500 million, with or without credit enhancement from the Islamic Corporation for the Insurance of Investment and Export Credit.”
Stakeholders React
Commenting on the development, the director/CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf emphasized the need to assess the current proposal within the framework of the medium-term expenditure plan approved by the National Assembly.
He said it is crucial to determine if this proposal aligns with the funding strategy outlined in the current budget, which includes a deficit financing approach.
According to Yusuf, this financing strategy involves a combination of external loans and domestic debt. Therefore, it is essential to evaluate whether this proposal fits within that structure. If it does not, it raises some important concerns that we must address.
“A key area of focus should be debt sustainability. It is vital to ensure that our fiscal capacity remains adequate to support essential government projects and operations. We must pay attention to our level of debt exposure to avoid overwhelming debt service burdens that could hinder future financial flexibility.
“Additionally, we must carefully review this proposal in terms of its cost implications, particularly concerning interest payments and the specific objectives for which the debt is intended. Understanding the rationale behind the spending and the potential tax liabilities is crucial.”
He added that “it is also important to consider whether the debt will enhance the economy’s productivity in the long run. We should evaluate whether these loans are structured to be more concessionary, as this can significantly impact overall debt sustainability. Moreover, we must assess our capacity to repay the loans, which is a critical factor.
“These factors represent important metrics that should guide our evaluation of the proposal. A thorough examination will help us make an informed decision rather than a hasty endorsement or rejection. I believe this careful consideration is what the National Assembly should prioritize wholeheartedly.”
Also speaking, chief partner at SPM Professionals, Dr. Paul Alaje, said, “The new borrowing is perhaps part of the budgetary plan. However, with the announcement that we have met our revenue target, we should have a slow energy towards borrowing because borrowings always come at a cost, especially when the borrowings are commercial in nature. Once it’s not bilateral or multilateral, they usually come at a significant cost. Any money that is borrowed should have direct impact and should go into infrastructure, namely energy, educational infrastructure, health infrastructure, road and rail. Other than that, we discourage borrowing. The worry about borrowing is about the impact on the economy. And when you look at it by how much our economy has grown and by how much borrowing has grown, you know that we really need to worry so much about borrowing. As we speak today, debt service to revenue remains a major worry in Nigeria. And if you continue to borrow, it’s like pouring more fuel into the fire and hoping that the fire will be put out someday. I doubt really much. While I understand the need for more money because of our critical infrastructure and expenditure, the source of money is also very, very important. Therefore, our position regarding borrowing will be, see if we are making more in revenue, we need to slow down borrowing. And if we must borrow at all, we must attach this borrowing directly to infrastructure only.”
On his part, the chief executive of Cowry Asseys Management Limited Johnson Chukwu queried the need for the government to seek approval after it announced last month that there would be no more borrowing this year.
“I think the first question we have to ask is: the government said they had met their full-year revenue projection as of August, and they also said they had ceased borrowing. Those statements were made last month, in September. So what changed? Was the government’s revenue assumption not real? If they had already met their projected revenue estimate, what then is the purpose of the additional borrowing?
“We need to put this in context. What is the revenue shortfall for? Do we actually have a revenue shortfall? If we must borrow additionally, must we borrow externally, given the volatility of our foreign sources and our existing foreign currency obligations?
“Additionally, are we funding recurrent expenditure, or are we funding capital expenditure that is truly required? There are too many questions.
He however noted that if the borrowing is for refinancing maturing Eurobonds, where “they are able to borrow at a lower rate than what we are currently paying on the Eurobonds, I wouldn’t have any problem with that. If the borrowing cost is going to come down, then we would still have the same level of foreign currency exposure, but at a lower cost. That would make sense.
“But we need to see a proper breakdown. In terms of funding the budget deficit, the economy has not met the revenue expectations. That is at variance with the government’s claim. So, we are hearing one thing from the government and seeing another thing in the economic data within a matter of weeks.
“I have no objection to refinancing maturing Eurobonds, provided the refinancing cost is cheaper than the initial coupon on the maturing bond. Otherwise, since we have a reasonable level of foreign reserves, we should use those reserves to pay off that loan, and borrow only when financing costs are lower. If the refinancing is cheaper, I will support it.”
Commenting on the growth projections by the World Bank, Head Financial Institutions Ratings at Agusto & Co, Ayokunle Olubunmi noted that the projection was in line
