President Bola Tinubu has formally requested the National Assembly’s approval to secure a new $2.3 billion external loan to support key national projects and economic initiatives.
President Bola Tinubu has expanded his government’s external borrowing plan by proposing the issuance of a $500 million sovereign Sukuk, marking Nigeria’s first-ever entry into the international Islamic finance market. This move, detailed in a formal letter to the House of Representatives and read by Speaker Tajudeen Abbas on Tuesday, forms part of a broader $2.3 billion external loan request and adheres to Sections 21(1) and 27(1) of the Debt Management Office (Establishment) Act, 2003.
According to the President, the new borrowing proposal seeks the National Assembly’s approval to raise funds through multiple channels to implement the 2025 Appropriation Act, refinance maturing Eurobonds, and diversify Nigeria’s debt instruments by incorporating Islamic finance products into its portfolio.
Tinubu explained that under the 2025 fiscal framework, Nigeria projects $9.27 billion in new borrowing to finance its budget deficit, of which $1.84 billion will be raised from external sources at an assumed exchange rate of ₦1,500 per US dollar. The planned external borrowings would come through a mix of Eurobonds, syndicated loans, bridge financing, or direct multilateral loans, depending on market conditions and cost efficiency.
A major component of the plan is the refinancing of Nigeria’s $1.118 billion Eurobond originally issued in 2018 at a 7.625% coupon rate and due in November 2025. Tinubu emphasized that refinancing maturing debts through Eurobonds or syndicated loans is a standard practice in global debt markets, ensuring debt sustainability and reinforcing investor confidence in Nigeria’s creditworthiness. “Routine refinancing of obligations,” the President noted, “is an essential aspect of prudent debt management and maintaining fiscal credibility.”
The highlight of Tinubu’s proposal is the issuance of a $500 million sovereign Sukuk Nigeria’s first international Islamic bond. This marks a strategic expansion beyond domestic issuances, which have successfully raised over ₦1.39 trillion since 2017 to fund critical infrastructure projects, particularly major road networks.
Tinubu stated that the international Sukuk would broaden Nigeria’s investor base, attract Sharia-compliant capital, and bridge the nation’s infrastructure financing gap. The issuance, he said, aligns with the government’s broader objective of diversifying its debt instruments and reducing reliance on conventional borrowing frameworks dominated by Eurobonds and syndicated loans.
To bolster the attractiveness of the Sukuk issuance, the Federal Government is exploring a credit enhancement guarantee from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), an affiliate of the Islamic Development Bank (IsDB) Group. This guarantee would enhance Nigeria’s credit profile, potentially lower borrowing costs, and improve investor confidence in the issuance.
Tinubu explained that if the ICIEC guarantee is utilised, 25% of the proceeds from the Sukuk would be allocated to repaying high-cost debts, while the remaining 75% would fund pre-identified infrastructure projects. This structure, he noted, demonstrates the government’s commitment to sustainable debt management and transparent fiscal governance.
The President further assured lawmakers that both the Federal Ministry of Finance and the Debt Management Office (DMO) would engage reputable international transaction advisers to secure the most competitive pricing and favourable terms in light of global market volatility.
Tinubu reaffirmed his confidence in Nigeria’s status as a reliable and credible issuer in international capital markets, citing the country’s strong repayment history and commitment to fiscal discipline. He emphasized that these new financing initiatives are not just aimed at raising funds but at deepening market confidence and optimizing Nigeria’s debt strategy for long-term stability.
The latest borrowing request comes at a time when Nigeria faces persistent fiscal pressures, including a large budget deficit, rising inflation, and foreign exchange volatility. As Africa’s largest economy, Nigeria continues to pursue infrastructure-led growth while striving to maintain debt sustainability within acceptable global thresholds.
Economic analysts view the Tinubu administration’s approach as strategically pragmatic balancing the urgent need for capital inflows with careful management of external exposure. They note that Nigeria’s success in domestic Sukuk issuance has already showcased the viability of Islamic finance as a transparent and development-focused funding mechanism. Expanding this framework to international markets could not only enhance Nigeria’s credit rating but also diversify funding sources, particularly from Middle Eastern and Asian investors.
Experts also commend the decision to channel a quarter of the Sukuk proceeds toward retiring costly debt, describing it as a fiscally conservative measure that would help stabilize Nigeria’s debt profile and reduce interest burdens in the medium term.
Ultimately, Tinubu’s combined borrowing and Sukuk plan underscores a shift toward a more diversified, globally integrated debt strategy, leveraging both traditional and Islamic finance instruments to sustain Nigeria’s development agenda while safeguarding fiscal stability.
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