$516m loan: Reactions trail rising debt profile

Camillus Nnaji

As Nigerians react with shock to another foreign loan proposal by President Bola Ahmed Tinubu’s administration, concerns continue to mount over the Federal Government’s latest $516 million loan request approved by the Senate.

According to Senate President, Godswill Akpabio, the loan facility, sourced through Deutsche Bank, is intended for the construction of the Sokoto–Badagry Superhighway project. The funding, he explained, will be applied to the critical 1,000km stretch aimed at creating seamless connectivity between the Northwest and Southwest regions.

Akpabio, while reading the request letter on the Senate floor, emphasized the importance of investing in infrastructure, noting that the Senate has thrown its full weight behind the project.

He said: “The project is strategic. It will strengthen trade connectivity between the North and the South. It is better to borrow for infrastructure, and this is commendable. I urge the Committee on Foreign and Local Debt to oversee the request.”

The loan has a nine-year tenure, including a three-year grace period, with interest capped at 5.3 percent per annum. The Federal Government will also provide an additional N265.54 billion as counterpart funding for land acquisition, compensation, and related infrastructure.

However, concerns persist over Nigeria’s rising debt profile, which has reportedly surged to about N159 trillion. This includes high-interest treasury bills, increased external borrowing, and mounting debt servicing costs—often at the expense of projected revenue. The country’s debt-to-revenue ratio remains alarming, prompting warnings from international financial institutions such as the International Monetary Fund (IMF).

Former Vice President and 2023 presidential candidate of the Peoples Democratic Party (PDP), Atiku Abubakar, strongly criticized the loan request, describing it as one borrowing too many.

While acknowledging the need for infrastructure development, Atiku questioned the transparency and sustainability of the government’s borrowing strategy.

“At a time when Nigerians are groaning under the weight of unsustainable debt, resorting to yet another foreign loan without transparent terms or a clear cost-benefit analysis raises serious concerns about prudence and accountability,” he said.

He added that although the North requires infrastructure development, it should not come at the cost of mortgaging the future of unborn Nigerian children through indiscriminate borrowing.

In a similar vein, former Governor of the Central Bank of Nigeria (CBN) and Emir of Kano, Lamido Sanusi, criticized the administration’s borrowing pattern.

He questioned the rationale behind removing fuel subsidy while simultaneously increasing borrowing.
Writing on his X (formerly Twitter) account, Sanusi asked: “If subsidy has been removed, why then the borrowing?”

Former Ekiti State Governor, Ayo Fayose, also faulted the continued borrowing, questioning its impact on the lives of ordinary Nigerians.

He noted that despite the rising volume of foreign loans, citizens have seen little improvement in their living conditions.
Similarly, former Anambra State Governor and 2023 presidential candidate of the Labour Party, Peter Obi, warned that excessive borrowing could jeopardize the future of coming generations.

He argued that reckless borrowing is a sign of a failing state.

However, the Presidency has defended its borrowing policy. The Special Adviser to the President on Policy Communication, Daniel Bwala, stated that the loans are targeted at infrastructure and other critical sectors of the economy.

“We are borrowing to invest in key sectors, particularly infrastructure. Nigeria faces an infrastructure deficit requiring between $30 billion and $100 billion annually. What we currently have is insufficient, hence the need to borrow,” he said.