House of Representatives Approves President Tinubu’s Request to Borrow $2.35 Billion, Issue $500 Million Sovereign Sukuk to Fund 2025 Budget and Infrastructure Projects
The House of Representatives has approved President Bola Ahmed Tinubu’s request to borrow $2.35 billion from external sources to help finance Nigeria’s 2025 budget deficit. The legislative approval, which came after a comprehensive debate and report consideration by the House Committee on Aids, Loans, and Debt Management, also included the President’s proposal to issue a debut $500 million sovereign sukuk in the international capital market (ICM).
This dual approval signals yet another strategic shift in Nigeria’s fiscal and borrowing policy under the Tinubu administration, one that aims to balance budgetary shortfalls while pursuing infrastructure expansion through Islamic-compliant financing instruments. But it also raises renewed questions about Nigeria’s rising debt profile, revenue-to-debt servicing ratio, and the long-term sustainability of external borrowing in an economy still battling inflation, exchange rate volatility, and low foreign reserves.
The approval came during plenary on October 29, 2025, as lawmakers debated the economic implications of the new borrowing request. According to the House resolution, the implementation of the borrowing plan includes an external facility of N1.843 trillion (equivalent to $1.23 billion), to be raised at the 2025 budget exchange rate of ₦1,500 per U.S. dollar. This forms part of the financing plan for the ₦9.27 trillion budget deficit captured in the 2025 Appropriation Act.
The Committee on Aids, Loans and Debt Management, in its report, stated that the loan proposal had undergone due legislative scrutiny and complied with the provisions of the Debt Management Office (DMO) Establishment Act, 2003, particularly sections 21(1) and 27(1), which require National Assembly approval for any form of new external borrowing.
The committee emphasized that the external financing is necessary to plug funding gaps in the budget and ensure the timely implementation of capital projects, especially in sectors like energy, agriculture, roads, and public transportation
In his letter to the National Assembly , President Tinubu justified the external borrowing request as a necessary response to Nigeria’s fiscal realities. He explained that the funds would be sourced through one or a combination of financing instruments such as Eurobonds, loan syndications, or bridge financing facilities, depending on prevailing market conditions and interest rates.
He assured lawmakers that the new borrowing would be undertaken in a manner that aligns with global best practices and would seek the most favorable terms available in the international market.
“The federal government remains committed to ensuring debt sustainability and transparency in all its financing operations. These borrowings are not a choice; they are a necessity to maintain budget implementation momentum and stimulate growth through infrastructure delivery,” Tinubu wrote.
The President noted that the pricing of the new Eurobonds would align with the current yield levels on Nigeria’s existing international bonds, which range between 6.8 percent and 9.3 percent, depending on maturity structure.
Perhaps the most notable aspect of the approval is the President’s plan to issue a $500 million sovereign sukuk — Nigeria’s first external Islamic-compliant bond offering.
Sukuk, unlike traditional bonds, comply with Islamic finance principles that prohibit interest-based transactions. Instead, investors earn returns through profit-sharing arrangements tied to tangible assets or project revenues.
According to Tinubu’s communication to the House, the sukuk issuance will help diversify Nigeria’s investor base, deepen the FGN securities market, and attract foreign investors from the Middle East and Asia who traditionally prefer Sharia-compliant financial instruments.
Tinubu also noted that proceeds from the sukuk issuance would be used to fund key infrastructure projects — particularly roads, bridges, energy, and water systems — while 25 percent may be deployed to refinance high-cost debt to reduce Nigeria’s overall debt service burden.
“The proposal is for the House of Representatives to approve the issuance of a stand-alone debut sovereign sukuk, with or without credit enhancement from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank (IsDB) Group,” the President said.
He also referenced Nigeria’s past success with domestic sukuk, which since 2017 has raised over ₦1.39 trillion for critical infrastructure projects across the federation. The external sukuk, he said, would complement these domestic efforts and “open Nigeria to a new class of patient capital investors.”
Following extensive deliberation, the House leadership commended the President’s initiative to explore diversified funding sources but cautioned the executive against excessive external borrowing.
The Chairman of the Committee on Aids, Loans, and Debt Management, Hon. Safiyanu Gaya, presented the committee’s report recommending the approval of both requests, stressing that all borrowing agreements must be subjected to transparent implementation oversight and post-disbursement monitoring.
Gaya said:
“The approval today is not a blank cheque. It is a structured framework under which the Federal Government must operate with accountability. We have carefully examined the debt sustainability indicators and found them within acceptable thresholds as presented by the DMO.”
However, some opposition lawmakers voiced concerns about Nigeria’s growing debt obligations. They argued that continuous borrowing could mortgage the nation’s future and worsen the cost of living for ordinary citizens.
Minority Leader Kingsley Chinda (PDP, Rivers) expressed skepticism over the long-term benefits of new borrowings without visible improvement in Nigeria’s revenue generation.
Chinda stated:
“We are borrowing more without a clear plan for repayment. What are we producing that generates foreign exchange? Every administration keeps adding to the debt pile, and Nigerians keep paying through inflation, taxation, and devaluation.”
Other lawmakers from the Labour Party and NNPP raised concerns about transparency and the actual utilization of previous loans. They called for a public audit of Nigeria’s debt portfolio and a stronger focus on domestic revenue mobilization instead of repeated foreign borrowing.
Still, the motion sailed through, supported by the majority bloc dominated by members of the All Progressives Congress (APC), who defended the administration’s borrowing plans as part of a medium-term fiscal consolidation strategy.
According to the Debt Management Office (DMO), Nigeria’s total public debt stock stood at ₦97.34 trillion as of June 2025, representing both domestic and external components. The figure marks a steady rise from ₦87.38 trillion in December 2024.
While the government insists that the debt remains sustainable — with a debt-to-GDP ratio below 45 percent — many economists argue that the real concern lies in the debt service-to-revenue ratio, which has been hovering above 70 percent, meaning that for every ₦100 earned, ₦70 goes into servicing existing debt.
Nigeria’s external debt, estimated at $45 billion, is increasingly dominated by multilateral and commercial borrowings. The new $2.35 billion borrowing, if executed, will further tilt the balance towards external creditors, although the sukuk structure could mitigate foreign exchange risks if well managed.
Financial analysts have offered mixed reactions to the House approval.
Dr. Ayo Teriba, CEO of Economic Associates, described the move as “a pragmatic step” given Nigeria’s fiscal pressures.
“Borrowing is not inherently bad if tied to productive investments. The challenge is ensuring accountability and project efficiency. The sukuk option, in particular, offers Nigeria an ethical and cost-effective financing path,” he said.
On the other hand, Lagos-based economist and former banker, Mrs. Titi Adebayo, warned that the reliance on foreign borrowing reflects a deeper structural weakness.
“The country’s real problem is not lack of funds but lack of fiscal discipline. We cannot continue borrowing to fund recurrent expenditures under the guise of infrastructure financing,” she said.
The introduction of a sovereign sukuk on the international market marks a significant development in Nigeria’s financial diplomacy. Countries such as Indonesia, Malaysia, and Saudi Arabia have long used sukuk to attract long-term investors while aligning with Islamic finance principles.
Nigeria’s debut sovereign sukuk issuance in 2017 helped fund 25 key road projects across six geopolitical zones. Since then, successive issuances have continued to gain investor confidence, with oversubscriptions recorded in each round.
The planned $500 million sukuk aims to replicate that success at a global scale — tapping into the $4 trillion Islamic finance market, while signaling Nigeria’s readiness to embrace alternative instruments amid tightening conventional credit markets.
Nigeria’s latest borrowing move comes at a time when developing economies face rising costs of debt amid U.S. interest rate hikes and global capital outflows. Many African economies, including Kenya, Ghana, and Egypt, have turned to multilateral lenders and non-traditional instruments like sukuk to ease pressure on their fiscal systems.
Tinubu’s strategy appears to align with this global pivot — combining Eurobond borrowing for budget financing and sukuk issuance for infrastructure growth. However, analysts warn that success will depend on market reception, Nigeria’s credit rating, and its ability to manage exchange rate risk.
The House approval marks another milestone in Nigeria’s evolving debt and financing policy. For President Tinubu, the twin objectives are clear — stimulate infrastructure development and stabilize fiscal operations. But the challenge remains ensuring that borrowed funds translate into tangible growth rather than deepening Nigeria’s debt trap.
As one senior lawmaker observed after the session:
“Borrowing should be a bridge, not a crutch. What we do with this money will determine whether Nigeria moves forward or sinks deeper.”
The approval may boost investor confidence in Nigeria’s financial credibility, especially with the sukuk’s Islamic-compliant structure offering a diversified appeal. Still, the public will be watching closely — demanding transparency, accountability, and a genuine link between the billions borrowed and the everyday lives of citizens struggling under inflation and unemployment.