Renowned financial expert, Prof. Uche Uwaleke, has called for a fundamental rethink of how Nigeria finances infrastructure, citing the country's growing public debt burden. According to him, the Nigerian capital market offers viable alternatives to government borrowing. Uwaleke argued that the current model, where government borrows and carries most of the financial risks, is unsustainable. He proposed a new approach where government uses its institutions, assets, and regulatory influence to attract private investment.
Nigeria's total public debt has rallied to N166.79 trillion as of June 30, 2026, representing a 9.4% increase from the previous year. The debt stock also increased by N7.44 trillion in just three months. The pressure is compounded by the cost of servicing these obligations, with Nigeria projected to spend about US$11.6 billion on debt service in 2026. This amount is close to half of the expected government revenue, highlighting the need for a new approach to infrastructure financing.
Uwaleke proposed that the Nigerian capital market can unlock opportunities to finance Nigeria's infrastructure through infrastructure bonds, infrastructure funds, and infrastructure investment trusts. These instruments can attract institutional investors and ordinary Nigerians into commercially viable projects. Properly structured, these instruments can channel private savings into productive infrastructure while ensuring long-term project financing is supported by revenue streams generated by the assets themselves.
The proposed infrastructure bonds, for example, can provide long-term financing whose repayment is supported by the cash flows of the infrastructure project itself. Where tolls, user charges, power-purchase agreements, or other predictable revenues are sufficient, these bonds can be self-liquidating rather than an additional burden on general government revenues. This approach can help reduce the country's reliance on government borrowing and mitigate the risks associated with debt servicing.
Uwaleke's proposal is aimed at moving beyond a model where government borrows and carries most of the financial risk. Instead, he advocates for a model where government uses its institutions, assets, and regulatory influence to attract private investment. This approach can help unlock new sources of funding for infrastructure development while reducing the burden on government finances.
The Nigerian capital market has the potential to play a critical role in financing infrastructure development in the country. With the right instruments and structures in place, the market can attract a wide range of investors, including institutional investors and ordinary Nigerians. This can help mobilize long-term domestic and international capital to finance critical infrastructure without further deepening the public debt burden.
Uwaleke's call for a fundamental rethink of infrastructure financing is timely, given the country's growing debt burden. With the right approach, Nigeria can unlock new opportunities for infrastructure development while reducing its reliance on government borrowing. The proposed infrastructure bonds, funds, and investment trusts offer a viable alternative to traditional government borrowing and can help support the country's economic growth and development.
Key points
- Nigeria's growing public debt burden demands a fundamental rethink of infrastructure financing.
- The Nigerian capital market offers viable alternatives to government borrowing, including infrastructure bonds and funds.
- Properly structured infrastructure bonds can provide long-term financing whose repayment is supported by the cash flows of the infrastructure project itself.
