Tinubu Seeks National Assembly Approval for $2.3bn External Loan and $500m International Sukuk Issue

President Bola Ahmed Tinubu has formally requested the approval of the National Assembly for a new $2.3 billion external borrowing plan as part of efforts to finance Nigeria’s 2025 budget and strengthen the country’s fiscal framework. The President also announced plans to issue a $500 million sovereign Sukuk, marking Nigeria’s first foray into the international Islamic finance market.

The request, contained in a letter read on the floor of the House of Representatives by Speaker Tajudeen Abbas on Tuesday, was made in line with Sections 21(1) and 27(1) of the Debt Management Office (DMO) Establishment Act, 2003.

According to the letter, the borrowing plan seeks legislative endorsement for the implementation of the 2025 Appropriation Act, refinancing of maturing Eurobonds, and expansion of Nigeria’s debt instruments to include Islamic finance products. The initiative, the President noted, is critical to financing budgetary shortfalls while ensuring debt sustainability and boosting investor confidence in the Nigerian economy.

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Tinubu’s Fiscal Strategy and the Role of External Borrowing

President Tinubu explained that Nigeria’s 2025 fiscal framework anticipates a total of $9.27 billion in new borrowings to close the budget deficit, of which $1.84 billion will come from external sources, calculated at an assumed exchange rate of ₦1,500 to $1.

The President outlined multiple financing instruments that could be deployed to raise the funds, including Eurobonds, syndicated loans, bridge financing, and direct loans from multilateral institutions. The approach, he said, is aimed at optimising cost and effectively managing financial risks amid global market volatility.

A major component of the borrowing plan is the refinancing of Nigeria’s $1.118 billion Eurobond, issued in 2018 at a coupon rate of 7.625%, and due for maturity in November 2025. According to Tinubu, refinancing maturing obligations through new Eurobond or syndicated loan arrangements is a standard international debt management practice, ensuring continuity, fiscal credibility, and investor confidence.

He assured lawmakers that the move was part of a broader strategy to preserve Nigeria’s fiscal stability while maintaining the government’s reputation as a consistent and credible issuer in global capital markets.

Nigeria’s International Sukuk Debut: Expanding the Frontier of Islamic Finance

In addition to the external borrowing request, President Tinubu unveiled Nigeria’s plan to issue a $500 million sovereign Sukuk—its first in the international market. The Sukuk issuance, he explained, is designed to diversify Nigeria’s investor base and bridge the country’s infrastructure financing gap, while also broadening access to Islamic finance instruments.

The decision to venture into the global Islamic finance market follows the success of Nigeria’s domestic Sukuk programme, which has raised ₦1.39 trillion since its introduction in 2017. These funds have been used to finance critical infrastructure, including major road projects across the six geopolitical zones.

To strengthen the offering, the Nigerian government is seeking a credit enhancement guarantee from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) — a member of the Islamic Development Bank (IsDB) Group. The ICIEC’s backing, Tinubu noted, would reduce borrowing costs by improving Nigeria’s credit profile and making the Sukuk more attractive to international investors.

“If the ICIEC credit guarantee is utilised, 25% of the proceeds will be used to repay relatively expensive debt obligations, while the balance will finance pre-identified infrastructure projects,” Tinubu wrote.

The President also assured that the Federal Ministry of Finance and the Debt Management Office would engage reputable transaction advisers to negotiate competitive pricing and terms for the issuance, particularly in light of the current high global interest rate environment.

Balancing Growth and Debt Sustainability

The new borrowing plan comes at a time when Nigeria faces the dual challenges of funding a large fiscal deficit and managing an increasingly complex debt portfolio. The Tinubu administration has consistently emphasised infrastructure-led growth as a key driver of economic recovery and long-term development.

As Africa’s largest economy, Nigeria continues to balance this growth ambition with the imperative of maintaining debt sustainability. Analysts believe the combination of traditional and Islamic financing options represents a strategic and pragmatic approach to fiscal management, especially given the constraints of the current global financial environment.

Economic observers have also welcomed the government’s diversification of borrowing instruments, noting that the international Sukuk issuance could open Nigeria to a new class of investors from the Middle East and Asia, while simultaneously reducing reliance on conventional debt instruments such as Eurobonds.

The allocation of a quarter of the Sukuk proceeds to retire costly debts, experts say, demonstrates a cautious and calculated debt management approach. The remainder, dedicated to infrastructure development, aligns with the government’s Renewed Hope Agenda, which prioritises transportation, energy, and industrial infrastructure as catalysts for job creation and sustainable growth.

Tinubu expressed optimism that the combination of the $2.3 billion borrowing plan and the $500 million Sukuk issuance would not only strengthen Nigeria’s fiscal capacity but also enhance investor confidence in the government’s commitment to transparency and responsible debt management.

With the National Assembly’s approval pending, Nigeria’s entry into the international Islamic finance market could mark a significant milestone in its quest for innovative, diversified, and sustainable financing solutions.