Tinubu’s mega borrowing plan: Hope, hype, or heaviness?

IBy Prof Chibuike Uba,Ph.D

n this write up, Prof Chibuike Ubah observed issues surrounding President Bola Tinubu ‘s mega borrowing plans and suggests Nigeria must enact a Debt Sustainability Framework Law that limits future borrowing to projects with positive economic returns and mandates legislative and public consultation.

President Bola Ahmed Tinubu’s recent loan request, approved by the Nigerian Senate, marks one of the most ambitious borrowing plans in Nigeria’s modern history.

The comprehensive package includes $21.19 billion in direct foreign loans, €4 billion, ¥65 billion, a $65 million grant, and domestic borrowing through government bonds totaling approximately ₦757 billion. Also included is a provision to raise up to $2 billion through a foreign-currency-denominated instrument in the domestic market.

Over a six-year horizon, these funds are earmarked for infrastructure, energy, health, security, agriculture, youth empowerment, and climate adaptation.

While the sheer volume of the proposed investment suggests bold intent, the critical question remains: is this a pathway to sustainable development or a deepening of Nigeria’s debt dependency?

The total loan package is staggering, potentially over $30 billion in today’s exchange terms. Nigeria’s public debt already exceeded ₦121 trillion ($91 billion) as of early 2025, according to DMO data. This new borrowing could push the figure past $120 billion.

Pix: Prof Ubah

This is particularly alarming amid a low revenue-to-GDP ratio of around 7 to 9 percent, a heavy debt service burden that exceeded 90 percent of revenue at points in 2023 and 2024, persistent fiscal deficits, and limited non-oil revenue expansion. Unless accompanied by sweeping fiscal reforms, these new loans could exacerbate Nigeria’s debt overhang, crowd out social spending, and further weaken the naira.

This borrowing package includes $21.19 billion in foreign loans sourced from multilateral, bilateral, and Chinese lenders; €4 billion in euro-denominated loans; ¥65 billion in yen loans, likely from Japan or China; a $65 million grant; ₦757 billion in domestic government bonds; and up to $2 billion raised through foreign-currency-denominated bonds issued in the local market.

While the borrowing mix includes a $65 million grant, details on its source, conditions, and allocation remain unclear. Grants—unlike loans—present an opportunity for non-debt investment in social sectors. Transparency on such grants is key to ensuring they’re not politicised or misappropriated.

According to the latest Debt Sustainability Analysis by the DMO, Nigeria’s external debt service-to-revenue ratio is projected to exceed 60% by 2026 if current trends persist. In fact, recent data shows that this ratio has sometimes exceeded 100%, meaning the government spends a significant portion—or even more than its total revenue—on debt repayment.

This situation is widely considered unsustainable and can severely hinder the government’s ability to fund essential services and infrastructure development. This far surpasses the 30–35% threshold recommended for low-income countries, indicating heightened vulnerability to fiscal distress.

The regional and project spread of the plan is politically strategic. For the first time, the Eastern rail line (Port Harcourt to Maiduguri) receives a dedicated $3 billion, which is a notable win for the South-East and North-East. The Akwanga–Jos–Bauchi–Gombe road, Eastern and Western Super Grids, and Sokoto and Yobe health and climate projects suggest northern equity.

Meanwhile, the Lagos-Calabar highway, Lagos Green Line, and Lekki access roads speak to the South-West and South-South. This could be seen as geopolitical balancing. However, the risk lies in tokenism versus actual delivery, given Nigeria’s history of approved but unexecuted projects. The regional spread may calm political tensions, but credibility hinges on transparent and timely execution that avoids elite capture.

Projects like railways, highways, ports, and power infrastructure dominate. This aligns with economic diversification and connectivity goals. However, only about $200 million appears earmarked for health, youth employment, and food security. This is in a country battling rising malnutrition, underfunded primary health systems, 50 to 60 percent youth unemployment or underemployment, increasing rural poverty, and climate vulnerability.

Without rebalancing toward people-centered investment, infrastructure may enrich contractors and politicians more than citizens. Roads, rails, and ports without healthy, educated, and employed citizens amount to dead capital.

Loans come from multilaterals like AfDB, bilaterals like Japan, and Export Credit Agencies. Each has differing conditions. Chinese financing dominates in rail and power, raising questions of project sovereignty. China often insists on Chinese firms and labour, non-competitive procurement, and opaque terms.

There is also a risk of asset forfeiture if Nigeria defaults, as seen in Zambia and the fears raised in Sri Lanka. Nigeria must negotiate smarter and enforce local content policies to avoid neo-colonial entrapment. If Chinese financing insists on Chinese contractors and labour, ignores Nigerian content laws, and evades parliamentary scrutiny, then Nigeria risks surrendering both economic value and strategic autonomy.

We must demand that all loans—whether from China, JICA, AfDB, or ECAs—pass the test of competitive procurement, clear local benefit, transparent terms, and public disclosure.

This is precisely why Nigeria should seriously consider aligning its infrastructure and human development pipeline with the EU Global Gateway Initiative. The Global Gateway is a €300 billion investment strategy aimed at supporting sustainable, trusted, and inclusive infrastructure in partner countries. Unlike traditional loans that often burden national debt profiles, the Global Gateway blends grants, concessional loans, and private capital mobilisation to fund transformative projects.

These projects span renewable energy, digital connectivity, education, climate resilience, and healthcare. These sectors are not only aligned with Nigeria’s developmental gaps but are also critical to building an economy that serves its youthful and rapidly growing population.

Moreover, the Global Gateway enforces high governance, transparency, and sustainability standards. This offers Nigeria an opportunity not only to fund infrastructure but also to institutionalise reforms and improve project outcomes.

However, access to this facility is not automatic. Nigeria must undertake several strategic steps to benefit from it. First, it must build a bankable, priority-driven project pipeline aligned with EU-Africa cooperation frameworks and the Sustainable Development Goals. Second, it must improve fiscal governance, procurement transparency, and legal safeguards to meet EU due diligence requirements. Third, Nigeria should strengthen inter-ministerial coordination and engage with EU Delegations in Abuja and Brussels to proactively position for funding and partnership opportunities. Fourth, Nigeria should use the Global Gateway platform to crowd in private sector investments, especially in clean energy, smart mobility, digital public infrastructure, and vocational training. Doing so will reduce reliance on sovereign debt.

Engaging the EU’s Global Gateway does not mean abandoning existing partners such as China or AfDB. Rather, it allows Nigeria to diversify its sources of development finance, reduce its debt burden, and gain access to non-debt resources that offer broader social and economic value. In an increasingly multipolar world, strategic engagement—not dependency—should guide Nigeria’s foreign economic policy.

By integrating EU-aligned projects into its national planning and budget frameworks, Nigeria stands a better chance of achieving sustainable growth while avoiding the fiscal traps of past loan cycles.

The borrowing spree also comes at a time of tightening global credit conditions, with rising interest rates in the U.S. and Europe increasing the cost of sovereign borrowing. As the dollar strengthens, Nigeria’s debt repayments could swell further, deepening fiscal strain.

Countries like Ghana and Zambia offer cautionary tales of over-borrowing without reform, resulting in debt restructuring and IMF bailouts. Nigeria must avoid this trajectory by ensuring every naira borrowed delivers long-term value.

There is no public breakdown of project cost-benefit analysis, debt repayment schedule, procurement strategy, or accountability mechanisms. This is particularly troubling given that the Fiscal Responsibility Act (2007) explicitly mandates that cost-benefit analyses must be conducted for all capital projects before funds are committed. Yet in practice, this legal requirement is frequently ignored, in clear contravention of the law.

The consequences of this non-compliance are evident in Nigeria’s long list of inflated, abandoned, or low-impact projects, such as the Lagos-Ibadan Expressway, Ajaokuta Steel, and East-West Road. Without citizen oversight, independent audit, and digital transparency tools, this borrowing plan could fuel a new round of elite looting rather than development.

The Nigerian public has heard many promises: “transformational” projects, “legacy” infrastructure, and “game-changing” investments. Yet corruption, mismanagement, and weak institutions often hijack even the best-laid plans. There is no publicly available debt impact assessment, cost-benefit analysis, or implementation timeline for many of these projects.

Civil society, parliament, and the media must push for a real-time project monitoring dashboard, mandatory external audit, publication of loan terms, and full activation of the Fiscal Responsibility Act and the Debt Management Office’s (DMO) oversight role. If we allow these loans to be signed in silence and executed in secrecy, we will pay loudly for the mistakes in the future.

Tools such as BudgIT’s Tracka, the Open Treasury portal, and NEITI audits should be leveraged to publish real-time updates on project disbursements and loan repayments. Embedding citizen-led oversight into the project lifecycle will help curb misuse.

Nigeria must enact a Debt Sustainability Framework Law that limits future borrowing to projects with positive economic returns and mandates legislative and public consultation. We must expand the tax base, block leakages, and reform subsidy structures to create more room for debt servicing without hurting the poor. Government should publish a live dashboard showing timelines, contractors, disbursements, and milestones for each project.

We must ringfence part of the borrowing for education, healthcare, climate resilience, and MSME financing. This would lift millions out of poverty and prevent social unrest. Avoiding project duplication and ensuring that local communities are engaged in design, implementation, and monitoring is key to preventing dislocation and resistance.

Lawmakers must demand detailed implementation reports every quarter. Civil society must track project milestones. Citizens must insist that every borrowed dollar improves lives—not just GDP figures.

While infrastructure investment is critical for Nigeria’s future, how the funds are borrowed, managed, and deployed will determine whether this borrowing drive becomes a turning point or a ticking debt bomb. The National Assembly must not merely rubber-stamp executive borrowing requests. As representatives of the people, lawmakers are constitutionally mandated to scrutinize loan terms, demand fiscal impact assessments, and monitor implementation through committee oversight and public hearings.

The International Monetary Fund (IMF) has repeatedly cautioned that Nigeria’s rising debt profile—especially if not linked to productive investments—could threaten macroeconomic stability and crowd out essential spending. These warnings underscore the urgency for reform-oriented borrowing practices.

A depreciating naira could dramatically inflate Nigeria’s external debt service obligations. For example, every 10% drop in the exchange rate could raise the naira cost of debt repayment by hundreds of billions, worsening the fiscal strain and eroding public trust.

Nigeria’s vibrant civil society and youth movements must intensify advocacy for loan accountability and transparent budgeting. Tools like participatory budgeting, public expenditure tracking, and citizen feedback platforms should be institutionalised across all government ministries.

Beyond debt and infrastructure, Nigeria must prioritize policies that stimulate domestic production, digital innovation, regional trade, and value-chain development. A resilient economy depends not on how much we borrow—but on how well we grow and empower our people.

The Senate’s approval is just the beginning. What Nigerians need now is vigilant follow-up, civic participation, and institutional integrity to ensure that every borrowed dollar delivers value, not just more burden. President Tinubu’s borrowing plan may be the boldest fiscal undertaking of his administration. But if boldness is not matched with prudence, transparency, and people-centered governance, Nigeria may find itself deeper in the economic hole it seeks to escape.

We cannot continue to borrow for prestige while our people suffer from neglect. This moment calls for leadership, not just in ambition but in accountability.

Prof. Chiwuike Uba, Ph.D.
Development Economist, Chartered Accountant, Tax Expert, and Governance, PFM & Public Sector Reforms Specialist. He is also the Chairman of the Board, ACUF Initiative for Policy and Governance.