The Nigerian Presidency has defended the proposed $21.7 billion external borrowing plan, stating that the loans are intended to finance productive investments that will drive economic growth and improve living standards. Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, addressed the criticism of the proposed external borrowing, explaining that the loan financing should be assessed based on the assets to be created and economic returns expected.
The proposed financing comprises $20.52 billion and €1.045 billion for projects and programmes across various sectors, including transportation, security, healthcare, agriculture, energy, digital infrastructure, education, and social protection. Transportation infrastructure accounts for about $10.6 billion, covering major projects such as the Sokoto-Badagry and Lagos-Calabar highways and the Kano-Kaduna rail project. The government is pursuing financing from multilateral and bilateral development partners, alongside other sources.
According to Oyedele, approximately $7.9 billion is expected from multilateral and bilateral partners, with the World Bank among the major institutions providing support. A $5 billion World Bank component would attract concessional financing at an average interest rate of about 2.1 per cent, while some social-sector loans would carry rates of around two per cent. The government is prioritizing favourable financing terms to reduce borrowing costs and ensure that the projects deliver lasting economic benefits.
Oyedele emphasized that the loan plan should not be seen as an addition to the country's debt burden but rather as an investment. He explained that the average lifespan of the projects under this plan is five years and that the government is seeking funds to finance projects that would strengthen national productivity and generate long-term economic value. The Minister addressed newsmen after the Federal Executive Council meeting presided over by President Bola Tinubu.
The government's borrowing plan has faced criticism from presidential candidates Alhaji Atiku Abubakar and Mr. Peter Obi, who expressed concerns about the potential impact on the country's debt burden. However, Oyedele assured that the government is making progress towards stabilizing the economy and that the 2027 budget will be ready before December. The Minister expressed optimism that the projects will drive economic growth and improve living standards.
The government is targeting single-digit inflation latest by the end of 2027. Oyedele stated that the projects will have a positive impact on the economy, and the government is committed to ensuring that the financing terms are favourable. The proposed loan plan is not a borrowing plan but an investment plan, according to Oyedele, who emphasized that it does not qualify as borrowing.
The Presidency has reiterated its commitment to transparency and accountability in the management of the loan plan. The government will continue to engage with stakeholders and provide updates on the progress of the projects. The loan plan is expected to have a positive impact on the economy, and the government is confident that it will deliver lasting economic benefits.
Key points
- The Nigerian government has defended its proposed $21.7bn external borrowing plan, saying it is for productive investments to drive economic growth.
- The proposed financing comprises $20.52 billion and €1.045 billion for projects and programmes across various sectors.
- The government is targeting single-digit inflation latest by the end of 2027.
