Why Nigeria Needs Fresh $21.7bn Loan Despite Rising Debt Burden – Finance Minister

The Federal Government has defended its plan to secure about $21.7 billion in fresh external loans, saying additional financing is needed to bridge Nigeria’s infrastructure funding gap, support economic growth and finance critical development projects across the country.

The proposed borrowing plan, covering 2026 and 2027, comprises $20.52 billion and €1.045 billion, equivalent to approximately $21.7 billion.

President Bola Ahmed Tinubu submitted the request to the National Assembly, arguing that Nigeria requires substantial investment to address infrastructure shortages and sustain economic development.

The proposed facilities would support projects and programmes in power, transportation, healthcare, education, agriculture, water supply, security and employment generation, as well as reforms to public financial management.

According to the President, the projects underwent technical and economic evaluations and are expected to create jobs, promote skills acquisition and entrepreneurship, reduce poverty and strengthen food security.

He said external borrowing had become necessary because the financial resources required to close Nigeria’s infrastructure deficit exceeded what the government could adequately provide from existing funding sources.

The request is subject to legislative approval and has not yet received final authorisation.

Why the government says Nigeria needs more loans

The administration’s main argument is that inadequate infrastructure continues to constrain productivity, investment and economic growth. It maintains that borrowing can provide the capital needed to finance projects that would otherwise face funding delays.

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Electricity, transport networks, healthcare facilities, education and water infrastructure are among the sectors expected to benefit from the proposed financing.

The government also argues that investment in these areas could stimulate economic activities, improve access to essential services and generate employment across the 36 states and the Federal Capital Territory.

However, the economic benefits will depend on whether the projects are completed on schedule, remain within budget and deliver returns sufficient to justify their financing costs.

Nigeria’s debt profile raises concerns

The proposed borrowing comes amid growing scrutiny of the country’s public debt.

Figures from the Debt Management Office show that Nigeria’s total public debt stood at ₦166.79 trillion at the end of June 2026, compared with ₦87.38 trillion in June 2023.

The increase has intensified debate over the government’s borrowing strategy, although the rise in the naira value of external debt has also been influenced by exchange-rate depreciation.

If the proposed facilities are fully approved and disbursed, they would add to Nigeria’s existing obligations, with the eventual impact depending on exchange rates, repayment terms and other changes in the debt stock.

Economists and business groups have therefore called for greater transparency about the individual projects to be financed, their costs, expected returns and repayment arrangements.

The Association of Small Business Owners of Nigeria has warned that new borrowing should be tied to projects capable of generating measurable economic benefits, including jobs, productivity and government revenue.

Questions over previous borrowing

The latest request has also prompted questions about the implementation of projects funded by earlier loans and the government’s outstanding obligations to contractors.

Senator Victor Umeh, who represents Anambra Central, questioned why contractors executing capital projects were still awaiting payment despite previous legislative approvals for borrowing.

He argued that the government needed to demonstrate how earlier facilities had been used and explain why budgeted projects remained underfunded.

Former Vice-President Atiku Abubakar, the presidential candidate of the African Democratic Congress, also urged the National Assembly to suspend consideration of the request until the government provides comprehensive information about the projects, contractors, costs, loan terms and repayment obligations.

The concerns centre on whether additional borrowing will produce sufficient economic returns or increase the pressure on public finances without delivering commensurate development benefits.

National Assembly to scrutinise request

The President’s proposal has been referred to the relevant National Assembly committees for consideration.

The legislative review is expected to examine the proposed facilities and their intended uses before lawmakers decide whether to approve the request.

The government maintains that the financing is necessary to address infrastructure shortages and support development, while critics insist that the administration must demonstrate the value of previous loans and provide clearer details of the new projects.

Ultimately, the justification for the proposed $21.7 billion borrowing plan will depend not only on the infrastructure needs identified by the government but also on the terms of the loans, the transparency of project selection, the effectiveness of implementation and Nigeria’s ability to meet its repayment obligations.