The Federal Government has defended its proposed $21.7 billion external borrowing plan, describing it as a long-term investment in infrastructure, human capital and economic growth rather than an additional debt burden.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the five-year financing plan was designed to fund productive assets capable of generating economic benefits that outweigh the cost of borrowing.
Oyedele spoke while briefing State House correspondents after Wednesday’s Federal Executive Council (FEC) meeting, presided over by President Bola Tinubu at the Presidential Villa, Abuja.
He said the proposed financing would support projects across transportation, defence and security, healthcare, agriculture, energy, digital infrastructure, small businesses, social protection, environmental protection and education.
According to the minister, about $10.6 billion has been earmarked for transportation infrastructure, including the Sokoto-Badagry and Lagos-Calabar coastal highways and the Kano-Kaduna Metro Rail project.
He clarified that the proposal submitted to the National Assembly did not mean the entire amount had already been borrowed or would necessarily be accessed in full.
Oyedele explained that the Federal Government was coordinating external financing for projects involving federal and state governments, the Federal Capital Territory, public agencies and development finance institutions.
He put the allocation for projects involving state governments, the FCT and other subnational entities at approximately $4.8 billion.
World Bank to Provide $5bn in Concessional Financing
The finance minister said about $7.9 billion of the proposed funding would come from multilateral and bilateral development partners.
Of that amount, he said, $5 billion would come from the World Bank at concessional interest rates averaging 2.1 per cent.
The indicative average interest rate on the commercial component was 7.8 per cent, which Oyedele said was lower than the rate on Nigeria’s November 2025 Eurobond.
He argued that external borrowing could strengthen the country’s balance sheet if the projects funded generated assets and economic benefits greater than their financing costs.
Using the Dangote Refinery as an example, the minister said large-scale projects often required external financing to be completed within a reasonable period.
He maintained that Nigeria needed a similar approach to transformative infrastructure projects capable of supporting long-term economic development.
Oyedele also defended the Tinubu administration’s economic reforms, saying several indicators had improved since major policy changes began in May 2023, although significant challenges remained.
He recalled that inflation stood at 22.41 per cent when the reforms began, while net foreign reserves were estimated at $859 million, insufficient to cover a month’s imports.
He also cited multiple foreign exchange rates, a premium of more than 60 per cent between official and parallel-market rates, and debt-service costs consuming about 97 per cent of government revenue as evidence of the economic pressures at the time.
According to Oyedele, economic growth increased from 2.74 per cent in 2023 to 4.43 per cent in the second quarter of 2026.
He added that inflation fell to 14.63 per cent in September 2026 from 20.98 per cent a year earlier.
The minister said foreign reserves had risen above $55 billion, while net reserves exceeded $45 billion.
He also put the naira’s exchange rate at between N1,330 and N1,350 to the dollar.
Oyedele further stated that Nigeria’s tax-to-GDP ratio rose from approximately seven per cent in 2023 to 12.5 per cent by the end of 2025.
He said the debt-service-to-revenue ratio had dropped from about 97 per cent to below 60 per cent, while Federation Account revenue increased by 44 per cent between 2024 and 2025. The government projected an increase of at least 50 per cent in 2026.
He also cited credit-rating improvements, Nigeria’s exit from the Financial Action Task Force’s grey list and removal from the European Union’s list of high-risk jurisdictions as signs of improved international confidence.
The figures were presented by the minister as evidence of progress under the government’s economic programme.
Over 10 Million Households Receive Cash Transfers
The government also highlighted social intervention programmes aimed at supporting households, students and businesses.
Oyedele said more than N372.6 billion had been disbursed through the Nigerian Education Loan Fund to over 1.5 million students.
He added that more than 10 million households had received cash transfers worth over N600 billion, with the government targeting at least 15 million beneficiary households.
According to the minister, more than 800,000 micro, small and medium-sized enterprises had accessed subsidised loans with single-digit interest rates, largely through the Bank of Industry.
He also outlined tax exemptions introduced under the government’s tax reforms.
Oyedele said low-income earners making up to N100,000 monthly had been exempted from personal income tax, while qualifying small businesses with annual turnover not exceeding N100 million had been exempted from corporate income tax, VAT collection and withholding-tax obligations, subject to applicable legal provisions.
He further cited the expansion of the Nigerian capital market, whose value he said had increased from about N30 trillion to more than N160 trillion in three years.
Despite the reported improvements, Oyedele acknowledged that the cost of living, particularly food prices, remained a major concern.
He said the Federal Executive Council had adopted a target of reducing inflation to single digits by the end of 2027 or earlier.
The council also endorsed a 90-day action plan developed by the National Economic Council to ease the cost of living through coordinated interventions by federal, state and local governments.
The plan prioritises food-price stability, critical infrastructure, human-capital development and job creation.
Oyedele said the council considered 10 memoranda presented by his ministry, covering financing arrangements for electricity transmission, railway infrastructure, road development and customs modernisation.
Among the proposals was a €155.9 million credit facility arranged through Deutsche Bank and other lenders to finance five substations and related transmission infrastructure under Phase One of the Presidential Power Initiative.
The project is expected to improve electricity reliability for households and businesses and help reduce energy costs.
The council also considered a $970 million syndicated term loan arranged by Standard Chartered and the Africa Finance Corporation to finance rolling stock for the Kano-Maradi railway line.
Oyedele said the railway investment was expected to reduce freight costs, improve logistics and facilitate regional trade.
Another €76.8 million facility from the ECOWAS Bank for Investment and Development was approved for Bauchi State’s transport infrastructure programme.
The project includes rural and urban roads, as well as routes connecting farms to markets.
The government also approved investment in non-intrusive inspection scanners and related technical support, repairs and maintenance for the Nigeria Customs Service.
The intervention is intended to speed up cargo clearance, combat smuggling and improve the detection of prohibited goods and dangerous weapons.
Oyedele said the government remained committed to fiscal discipline and investment in infrastructure and social development.
He maintained that the success of the $21.7 billion borrowing plan would ultimately depend on whether the funded projects delivered tangible economic value and improved the lives of Nigerians.
