The Federal Government has defended its proposed $21.7 billion external borrowing plan, describing it as a strategic investment in critical infrastructure and economic development rather than an attempt to accumulate more debt.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, explained that the proposed financing would support 46 projects across 11 sectors, including transportation, electricity, agriculture, education, social protection and climate-related initiatives.
Oyedele spoke on Wednesday while briefing State House correspondents after the Federal Executive Council meeting presided over by President Bola Tinubu at the Presidential Villa in Abuja.
He said the proposed borrowing plan was a long-term investment programme expected to span an average of five years, adding that the government might not necessarily borrow the entire amount.
According to him, approximately $10.6 billion of the proposed financing would be directed towards transportation infrastructure, including sections of the Lagos-Calabar and Sokoto-Badagry highways, as well as the Kano-Kaduna Metro Rail project.
The minister noted that 29 of the 46 projects would receive financing under concessional or blended terms, while 10 major projects would account for $12.5 billion, representing about 58 per cent of the total plan.
He added that the social sectors, agriculture, energy, social protection, climate and education would receive a combined $4 billion through concessional financing arrangements.
FG Explains How the Loans Will Be Used
Oyedele disclosed that about $7.9 billion would come from multilateral and bilateral development partners, with the World Bank providing approximately $5 billion at an average interest rate of 2.1 per cent.
He said the remaining financing would come from regional development finance institutions, export credit agencies and commercial banks.
According to the minister, the average indicative interest rate for the commercial component is 7.8 per cent, lower than the 9.1 to 9.6 per cent yield on Nigeria’s November 2025 Eurobond.
He attributed the improved borrowing terms to recent credit rating upgrades by international agencies, including Fitch, Moody’s and Standard & Poor’s.
The minister also clarified that $4.8 billion of the proposed amount was intended for subnational governments and public agencies, rather than the Federal Government alone.
He said $3.3 billion would go directly to states, while approximately $1.45 billion would be channelled through agencies and development finance institutions, including the Bank of Industry, Development Bank of Nigeria, Transmission Company of Nigeria and electricity distribution companies.
Oyedele explained that the Federal Government serves as the constitutional intermediary for external borrowing, making it necessary for such requests to pass through the federal authorities.
He maintained that the projects were expected to generate economic benefits that would outweigh the cost of financing.
Using the Dangote Refinery as an example, the minister argued that large-scale investments often require external financing because waiting to accumulate all the necessary funds could delay development for many years.
Power, Rail and Road Projects Receive Attention
The minister also outlined some of the financing proposals approved by the Federal Executive Council.
One of them was a €155.9 million credit facility from Deutsche Bank and other lenders to upgrade electricity substations under the first phase of the Presidential Power Initiative.
The project involves upgrading 132/33kV substations and establishing five new ones to improve electricity supply to homes and businesses while reducing energy costs.
Another approval was a $970 million syndicated term loan from Standard Chartered and the Africa Finance Corporation to provide rolling stock for the Karu-Maradi rail line.
Oyedele said the project would improve freight transportation, promote regional trade and strengthen the Northern Economic Corridor while reducing logistics costs and inflationary pressures.
The council also approved a €76.8 million credit facility from the ECOWAS Bank for Investment and Development for Bauchi State’s Transport Infrastructure Development Programme.
The financing is expected to support rural and urban roads, including farm-to-market routes designed to improve agricultural distribution and strengthen food security.
In addition, the council approved investment in non-intrusive inspection scanners, alongside technical support, repairs and maintenance for the Nigerian Customs Service.
The equipment is expected to speed up cargo clearance, reduce smuggling and misclassification of goods, and help security agencies detect contraband and dangerous weapons entering the country.
Government Defends Economic Reforms
During the briefing, Oyedele compared Nigeria’s economic situation in May 2023 with current conditions, arguing that the country faced serious economic challenges when the Tinubu administration assumed office.
He said inflation stood at 22.41 per cent at the time, while net foreign reserves were approximately $859 million, insufficient to cover one month of imports.
According to him, the difference between the official and parallel foreign exchange markets exceeded 60 per cent, creating opportunities for currency round-tripping and making it difficult for businesses to access foreign exchange.
He also alleged that the previous administration had printed more than ₦30 trillion to finance spending, an amount he said was worth over $20 billion at the time and contributed to the inflationary pressures Nigerians continued to experience.
Oyedele added that debt servicing consumed approximately 97 per cent of government revenue, while about 27 states struggled to pay salaries and owed pension and gratuity arrears.
He argued that the economic reforms introduced by the Tinubu administration had helped prevent a more severe economic crisis, including the possibility of hyperinflation and a deeper currency collapse.
FG Reports Improvement in Economic Indicators
The minister said Nigeria’s economic growth had increased from 2.74 per cent in May 2023 to 4.43 per cent in the second quarter of 2026.
He also stated that inflation fell to 14.63 per cent in September 2026 from 20.98 per cent a year earlier, following a peak of approximately 34 per cent during the period of intense inflationary pressure.
According to Oyedele, month-on-month food inflation declined by 1.55 per cent, which he described as evidence of easing food prices.
He further disclosed that the country’s foreign reserves had risen to more than $55 billion, their highest level in 18 years, while net reserves exceeded $45 billion compared with less than $1 billion three years earlier.
The minister said the naira was trading between ₦1,330 and ₦1,350 to the dollar and expressed confidence that the currency could appreciate further.
He also reported that Nigeria’s tax-to-GDP ratio had increased from about seven per cent in 2023 to approximately 12.5 per cent at the end of 2025.
At the same time, he said the debt-service-to-revenue ratio had dropped from 97 per cent to below 60 per cent.
Oyedele added that Nigeria’s credit ratings had improved following upgrades by Fitch, Moody’s and Standard & Poor’s, while the country had exited the Financial Action Task Force grey list and the European Union’s list of jurisdictions with strategic deficiencies.
FG Highlights Support for Students and Businesses
Addressing concerns that improvements in economic indicators had yet to translate into sufficient relief for ordinary Nigerians, the minister listed several government intervention programmes.
He said the Nigerian Education Loan Fund had disbursed ₦372.6 billion to more than 1.5 million students to support their education.
He also disclosed that more than 10 million households had received cash transfers worth over ₦600 billion, with the government targeting at least 15 million households.
According to him, more than 800,000 micro, small and medium-sized enterprises had benefited from subsidised loans at single-digit interest rates, mainly through the Bank of Industry.
The minister further stated that individuals earning up to ₦100,000 monthly had been exempted from personal income tax under the government’s tax relief measures.
He added that small businesses with annual turnover not exceeding ₦100 million had been exempted from corporate income tax, value-added tax obligations and withholding tax deductions.
Oyedele also said Nigeria’s capital market had expanded from approximately ₦30 trillion to more than ₦160 trillion in three years, adding that small investors accounted for over 90 per cent of market participants and benefited from capital gains tax exemptions.
FG Targets Lower Food Prices and Single-Digit Inflation
The minister said the Federal Executive Council had adopted measures to stabilise food prices and make essential commodities more affordable.
He explained that the government was working with state governments under a National Economic Council 90-day action plan to keep the prices of staple foods, including rice, yam, beans and maize, stable or reduce them before the end of the year.
According to him, the government would assess the gap between local food production and consumption to determine whether targeted imports were necessary.
He said any rice imports under the plan would be limited to unprocessed brown rice to protect local milling businesses and preserve domestic processing capacity.
Over the medium and long term, the government intends to expand irrigation farming, improve crop yields through scientific methods and reduce post-harvest losses.
Oyedele said these measures were intended to make Nigeria more self-sufficient in food production, stabilise prices and increase agricultural exports, particularly processed products.
The council also adopted a target of reducing inflation to single digits by the end of 2027 or earlier, while maintaining fiscal discipline during the election period.
Opposition Questions Proposed Borrowing
The government’s defence of the $21.7 billion borrowing plan comes amid criticism from opposition figures and political groups.
Former Vice President Atiku Abubakar, the presidential candidate of the African Democratic Congress, and the Makinde/Daura Campaign Council are among those who have criticised the proposal.
Atiku had urged the National Assembly to suspend consideration of the request until the Federal Government publicly disclosed the projects the proposed loans would finance.
The controversy has placed the government’s infrastructure financing strategy under scrutiny, with the administration insisting that the borrowing plan is designed to support economic growth, improve public infrastructure and generate returns that would justify the cost of the loans.
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