The Federal Government has defended its proposed $21.7 billion external borrowing plan submitted to the National Assembly, insisting that the funds are intended to finance infrastructure and other productive investments rather than merely increase the country’s debt burden.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, stated this on Wednesday after the Federal Executive Council (FEC) meeting presided over by President Bola Tinubu at the State House, Abuja.
Oyedele explained that the proposed financing programme would cover 46 projects across 11 sectors, with implementation expected to span an average of five years. He stressed that the proposal was a financing plan and did not mean the government would necessarily borrow the entire amount.
According to the minister, approximately $10.6 billion would be allocated to transportation infrastructure, including sections of the Lagos–Calabar Coastal Highway, the Sokoto–Badagry Highway and the Kano–Kaduna Metro Rail project.
He said the proposed financing would support investments in transportation, security, healthcare, agriculture, energy, digital infrastructure, education, social protection and other critical sectors.
“So, another part of this presentation is on the borrowing plan that was presented to the National Assembly. Altogether, if you convert the euro amount and add it to the dollar amount, it comes to $21.7bn. And we’ve seen some people with commentary saying that we are borrowing X, Y, Z.
“I’m pleased and excited to inform you that actually this does not qualify as borrowing. This qualifies as investment, and I will explain that to you in the next few minutes. Now, so what is this all about? This is an amount or a plan.
“First and foremost, this is a plan. It doesn’t even mean that we borrow all of it. So it’s a plan. The average lifespan of the project under this plan is five years, by the way. So, this means countries need to plan. You can’t be doing everything based on spontaneity and randomness. Now, these amounts, about $10.6bn out of it, are for investment in transportation infrastructure,” he explained.
A document detailing the proposal indicates that 29 of the 46 projects would receive concessional or blended financing, while 10 flagship projects account for $12.5 billion, representing 58 per cent of the total package.
World Bank, Development Partners to Provide Funding
Oyedele disclosed that approximately $7.9 billion of the proposed financing would come from multilateral and bilateral development partners, including $5 billion from the World Bank at an average interest rate of 2.1 per cent.
The remaining financing would be sourced from regional development finance institutions, export credit agencies and commercial lenders.
According to the document, the commercial component carries an average indicative interest rate of 7.8 per cent, below the 9.1 to 9.6 per cent yield on Nigeria’s November 2025 Eurobond.
The minister attributed the financing terms partly to credit rating upgrades by Fitch, Moody’s and Standard & Poor’s.
He also clarified that $4.8 billion of the proposed package was earmarked for state governments and government agencies, including $3.3 billion for states and approximately $1.45 billion for agencies and development finance institutions.
The institutions expected to benefit include the Bank of Industry, Development Bank of Nigeria, Transmission Company of Nigeria and electricity distribution companies.
“The Federal Government has the constitutional duty to be the interface for all external borrowing. So when people say we are borrowing $21.7bn, they need to know that a significant chunk is for states, the FCT, and agencies, not for the Federal Government alone,” he said.
The minister maintained that borrowing for productive infrastructure could generate economic returns exceeding the cost of financing.
He argued, “If Aliko Dangote was going to save money to build his refinery, it would not have been built in his lifetime. He had to take the financing to make it happen. $20bn is now listed in less than four years, and the value has more than doubled. This is exactly what we are doing for our country.
“There are people who will tell you borrowing is bad. You just need to ask them: in which country on this planet do you run an economy without borrowing? To the extent that you borrow one naira to create value of more than one naira, you should please borrow more.”
FEC Approves Power, Rail and Road Financing
The finance minister also announced that the FEC approved 10 memoranda he presented at the meeting, including financing arrangements for electricity infrastructure, railway development, road construction and customs inspection equipment.
Among the approvals was a €155.9 million credit facility from Deutsche Bank and other lenders to upgrade 132/33kV substations under the first phase of the Presidential Power Initiative.
The project involves five new substations intended to improve electricity supply to households and businesses while reducing energy costs.
The council also approved a $970 million syndicated term loan from Standard Chartered and the Africa Finance Corporation for rolling stock on the Karu–Maradi rail line.
Oyedele said the railway investment was expected to improve freight transportation, strengthen regional trade and support the Northern Economic Corridor while reducing logistics costs.
Another approval was a €76.8 million credit facility from the ECOWAS Bank for Investment and Development to Bauchi State for its Transport Infrastructure Development Programme.
The financing will support urban and rural roads, including farm-to-market routes designed to improve agricultural distribution and food security.
The council also approved investment in non-intrusive inspection scanners, alongside technical support, repairs and maintenance, for the Nigeria Customs Service.
The equipment is expected to accelerate cargo clearance, curb smuggling and misdeclaration, and improve the detection of contraband and illegal weapons.
Explaining the benefits of the power project, Oyedele said:
“As I said, there were 10 of them. I’ll just briefly speak to about four of them. One of them was a 155.9 million euro credit from Deutsche Bank and some other banks directed at upgrading about 132/33 kV substations and a few other ones. There are five of them, actually, five new ones under the Presidential Power Initiative Bash One. Essentially, this is a government intervention that will help ensure more reliable power for homes and businesses and lower energy costs.
“Another memo was with respect to a $970m syndicated term loan by Standard Chartered Africa Finance Corporation on rolling stock for the Karu-Maradi rail line. What is the essence of this? This will give us shipper freight, regional trade, the Northern Economic Corridor and lower prices for logistics, inflation and price levels.
“Another one was 76.8 million euros. This is from the ECOWAS Bank, and it is credit to Bauchi State for the Transport Infrastructure Development Programme, and this is going to help us with rural and urban roads, and to build farm-to-market access roads that will help with food security.
“And finally, council approved the investment in a non-intrusive inspection scanner for technical support, repairs, and maintenance to the Nigerian Customs Service. What is the essence of this? It will help with faster cargo clearance, less smuggling, and less misclassification. And we can then detect when some evil people want to bring in contraband and dangerous small weapons to our country.”
FG Targets Single-Digit Inflation by 2027
Oyedele also announced that the Federal Executive Council had adopted measures to stabilise food prices and reduce inflation to single digits by the end of 2027 or earlier.
He said the government was working with state governments under the National Economic Council’s 90-day action plan to address rising food costs and strengthen domestic agricultural production.
“The short term is to ensure that in the coming months, leading up to the end of the year, the price of the most important staple items, rice, yam, beans, maize, remains stable or comes down,” he said.
According to the minister, the government would assess the difference between domestic food production and consumption to determine the need for targeted imports.
He added that only unprocessed brown rice would be imported under the proposed arrangement to protect local milling jobs and preserve domestic processing capacity.
In the medium and long term, the government plans to expand irrigation farming, improve crop yields through scientific methods and reduce post-harvest losses.
“We will not only be food sufficient; prices will be stable and affordable, and we will export, and a lot of it will be processed before we export. There is nothing that says people cannot be rich doing farming. This is the level we are getting into,” Oyedele said.
Minister Highlights Economic Indicators
The minister also defended the administration’s economic reforms, arguing that Nigeria’s economic position had improved since the Tinubu government assumed office in May 2023.
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.
Oyedele further claimed that the previous administration had printed more than ₦30 trillion, equivalent to over $20 billion at the time, contributing to inflationary pressures that the country was still experiencing.
He said, “Inflation was at 22.41 per cent, and our reserve was net of $859m, not even enough to cover one month of imports. We had a spread between the official rate and the parallel rate of over 60 per cent premium, enabling round-tripping by the highly connected, while businesses, including manufacturers, could no longer access foreign exchange.
“We had printed altogether over N30tn to spend, and the impact of that amount, at the time, this was more than $20bn, is what we are dealing with today in inflationary pressure. Debt service at the time was consuming 97 per cent of revenue, nearly 100 per cent, and about 27 states could no longer reliably pay salaries. They were owing arrears of pension and gratuities.”
According to Oyedele, economic growth increased from 2.74 per cent in May 2023 to 4.43 per cent in the second quarter of 2026, while inflation fell to 14.63 per cent in September 2026 from 20.98 per cent a year earlier.
He added that foreign reserves had exceeded $55 billion, with net reserves rising above $45 billion from less than $1 billion three years earlier.
The minister also said Nigeria’s tax-to-GDP ratio increased from approximately seven per cent in 2023 to 12.5 per cent at the end of 2025, while the debt-service-to-revenue ratio declined from 97 per cent to below 60 per cent.
On the removal of petrol subsidies, Oyedele traced the policy’s history to 1973, when petrol sold for six kobo per litre, arguing that successive price increases had failed to resolve the underlying challenges.
“Each time we increased the PMS price, Nigerian people suffered for it, but no benefit came. This is the first time in that half-century that the problem has now been solved, and the benefits are now accruing to our country,” he said.
He also projected further appreciation of the naira, which he said was trading between ₦1,330 and ₦1,350 to the dollar.
“Even the IMF estimates that the naira is about 25 per cent undervalued. So anybody who wants to bet against the naira should make provision for their losses. The currency to hold is the naira, even more than the US dollar or pound sterling,” Oyedele said.
These figures and projections were presented by the minister as part of the government’s defence of its economic policies.
Government Cites Social Intervention Programmes
Addressing concerns about the gap between improving macroeconomic indicators and the financial difficulties faced by ordinary Nigerians, Oyedele highlighted government support programmes targeting students, households and small businesses.
He said the Nigerian Education Loan Fund (NELFUND) had disbursed ₦372.6 billion to more than 1.5 million students.
He added that over 10 million households had received cash transfers worth more than ₦600 billion, with the government targeting at least 15 million households.
“To date, we have N372.6bn disbursed through NELFUND to more than 1.5 million students, which means their parents and guardians do not have to worry about tuition and stipend. We have more than 10 million households that have received cash transfers worth more than N600bn, and the target is to reach at least 15 million households,” he said.
The minister further disclosed that more than 800,000 micro, small and medium-sized enterprises had benefited from subsidised loans carrying single-digit interest rates, mostly through the Bank of Industry.
He said low-income earners making up to ₦100,000 monthly had been exempted from personal income tax, while small businesses with annual turnover not exceeding ₦100 million had received exemptions from corporate income tax, value-added tax obligations and withholding tax deductions.
Oyedele also noted that the capital market had expanded from approximately ₦30 trillion to more than ₦160 trillion in three years.
Borrowing Plan Faces Criticism
The Federal Government’s defence comes amid criticism of President Tinubu’s request for legislative approval of the proposed external borrowing package.
Former Vice-President Atiku Abubakar has urged the National Assembly to suspend consideration of the request until the government publicly discloses the projects the proposed loans would finance.
Other critics have also questioned the scale of the proposed borrowing and its implications for Nigeria’s debt obligations.
The proposal, which comprises approximately $20.52 billion and €1.045 billion in external financing, remains subject to legislative consideration.
While the government maintains that the funds will support productive investments and generate long-term economic benefits, scrutiny of the proposed projects, financing terms, implementation arrangements and repayment obligations remains central to assessing the plan.
