Tinubu Seeks Approval for Additional $347 Million Loan: Proposal, Market Response, and Next Steps
Author: Jade Corporate Advisors Private Limited, India
Introduction: This article examines the recent approval of an additional $347 million external loan by President Bola Tinubu, focusing on the impact of the loan on Nigeria's key infrastructure and digital transformation projects, alongside the scrutiny from the National Assembly and market feedback on Nigeria’s growing debt profile.
Abuja, Nigeria – July 25, 2025 – President Bola Tinubu has sought and received approval from the House of Representatives for an additional $347 million external loan, which adjusts Nigeria's 2025-2026 external borrowing plan. This move is aimed at closing funding gaps for key infrastructure and digital transformation projects, while also sparking debate about the country’s growing debt and its economic consequences.
The Proposal: Addressing Key Funding Gaps
President Tinubu’s request for the additional loan centers on two major projects:
- Lagos-Calabar Coastal Highway (+$47 million): This ambitious infrastructure project, specifically Section 1 of Phase 1, has seen cost increases from an initial $700 million to $747 million. The President explained that the original financing plan, which involved a lead arranger for $700 million, required an additional $47 million to cover the shortfall, which is now being supported by export credit agencies.
- Nigerian Universal Communications Access Project (+$300 million): A large portion of the loan, $300 million, will fund this telecommunications initiative aimed at bridging Nigeria’s digital divide. The project will deploy approximately 7,000 telecom towers in underserved rural areas across the country.
The total external borrowing plan for 2025-2026 now amounts to approximately $21.89 billion, €2.19 billion, and ¥15 billion, alongside a €65 million grant. The President emphasized that these projects were chosen following thorough economic assessments and are expected to significantly contribute to national development goals such as job creation, skill development, entrepreneurship, and poverty reduction.
📌 Related Services to Explore
Investor-ready business plans, ESG reports, and feasibility documentation.
👉 How to prepare Investor-ready business ? Learn More
Modeling, pitch decks, and investor strategy for PE, VC, and DFIs.
📈 Explore CFO Services
Align projects with green finance frameworks and institutional capital.
📘 Explore ESG Advisory
Market Response and Legislative Scrutiny
After the proposal was read before the House of Representatives, it was referred to the Joint Committee on Finance, Aids, Loans, and Debt Management for further examination. The loan was ultimately approved following a review by the committee.
Several key points from the legislative review and the broader market sentiment included:
- Sustainability of Debt: Despite Nigeria’s public debt surpassing ₦145 trillion (around $91 billion in March 2025), the House Committee maintained that the country’s debt remains sustainable, pointing to a debt-to-GDP ratio of about 50%, well within the international threshold of 56%.
- Improved Debt Service-to-Revenue Ratio: The committee highlighted a reduction in the debt service-to-revenue ratio, which has fallen from over 90% to below 70%. This improvement is largely attributed to expected revenue increases from the Nigerian Tax Act 2025, which is projected to grow by over 18% annually from 2026.
- Concessional Terms: The government underscored that the loans will be sourced from development partners offering favorable terms, including low interest rates, grace periods, and extended repayment schedules, which are expected to support the country’s development agenda.
- Impact on Project Implementation and Economy: The loan is seen as crucial for enabling the timely execution of projects that have faced delays due to financial constraints. The government emphasized the long-term economic benefits, particularly in terms of job creation, skill acquisition, and poverty reduction, across sectors such as infrastructure, clean energy, education, and healthcare.
- Benefiting States: The loan will benefit 12 states directly, including Abia, Bauchi, Borno, Gombe, Kaduna, Katsina, Lagos, Niger, Oyo, Sokoto, Yobe, and Zamfara, through various projects in those regions.
- Concerns About Increased Borrowing: While the government defends the necessity and sustainability of these loans, there are ongoing concerns from some sectors about Nigeria’s expanding debt profile and potential future fiscal pressures.
Next Steps
With the House of Representatives' approval, the additional $347 million loan is now part of Nigeria's external borrowing strategy for 2025-2026. The next steps are focused on:
- Financial Closure and Project Implementation: The primary task now is securing the final closure of the loan agreements and ensuring that the associated projects, particularly the Lagos-Calabar Coastal Highway and the Nigerian Universal Communications Access Project, are executed on schedule.
- Monitoring and Accountability: Given the substantial public debt, it will be essential to closely monitor the execution of these projects, ensuring transparency in fund utilization and maintaining strong accountability frameworks to achieve the intended economic outcomes.
- Fiscal Consolidation: Projections for increased revenue from the Nigerian Tax Act 2025 and continued efforts to lower the debt service-to-revenue ratio will be key to ensuring the sustainability of Nigeria’s debt profile.
- Public Engagement: Ongoing communication with the public regarding the purpose, benefits, and repayment plans for these loans will be important to build trust and foster understanding of the government’s economic policies.
The approval of the loan demonstrates the government’s commitment to addressing critical infrastructure and digital connectivity gaps. However, the ultimate success of these initiatives will depend on efficient project delivery and prudent fiscal management, especially given the country’s ongoing economic challenges.
Comments