Precious Nwonu, Enugu

The Federal Government has defended its proposed $21.7bn supplementary external financing plan, arguing that the funds are intended to support long-term infrastructure and economic development rather than simply increase the country’s debt burden.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, gave the explanation on Wednesday while briefing State House correspondents after the Federal Executive Council meeting presided over by President Bola Tinubu in Abuja.

Oyedele said the proposed financing covered 46 projects across 11 sectors, with an average project lifespan of five years. He stressed that the plan represented a framework for financing development projects and did not necessarily mean the government would borrow the entire amount.

According to the minister, about $10.6bn of the proposed financing would be directed towards transportation infrastructure, including sections of the Lagos-Calabar and Sokoto-Badagry highways and the Kano-Kaduna Metro Rail project.

He said the projects were expected to improve connectivity, reduce the cost of transporting goods and support regional trade. Ten major projects account for about $12.5bn, representing 58 per cent of the proposed financing.

The plan also covers power, agriculture, healthcare, education, social protection and climate-related initiatives. Oyedele said projects in social sectors, agriculture, energy, social protection, climate and education, valued at about $4bn, would be financed entirely through concessional funding.

The minister disclosed that approximately $7.9bn would come from multilateral and bilateral development partners, with the World Bank accounting for $5bn at an average interest rate of 2.1 per cent.

He put the indicative average interest rate for the commercial component at 7.8 per cent, below the 9.1 to 9.6 per cent yield on Nigeria’s November 2025 Eurobond. He attributed the difference partly to credit rating upgrades by Fitch, Moody’s and Standard & Poor’s.

Oyedele also clarified that about $4.8bn of the proposed financing was intended for state governments and government agencies, rather than the Federal Government alone. Of that amount, $3.3bn would go directly to states, while approximately $1.45bn would be channelled through agencies and development finance institutions.

He cited the Bank of Industry, Development Bank of Nigeria, Transmission Company of Nigeria and electricity distribution companies among the institutions expected to benefit from the financing arrangements.

The minister argued that external financing could be justified where the resulting economic value exceeded the cost of borrowing, adding that major infrastructure projects often required funding beyond what could be accumulated through savings alone.

FEC Approves Power, Rail And Customs Projects

Oyedele said the Federal Executive Council approved 10 memoranda at Wednesday’s meeting, including financing arrangements for electricity infrastructure, rail transport, road development and customs operations.

One approval involved a €155.9m credit facility from Deutsche Bank and other lenders to upgrade five 132/33kV substations under the first phase of the Presidential Power Initiative.

He said the intervention was expected to improve electricity supply to households and businesses while helping to reduce energy costs.

The council also approved a $970m syndicated term loan from Standard Chartered and the Africa Finance Corporation to provide rolling stock for the Karu-Maradi rail line. The government expects the project to support freight movement, regional commerce and the Northern Economic Corridor.

Another approval was a €76.8m credit facility from the ECOWAS Bank for Investment and Development for Bauchi State’s Transport Infrastructure Development Programme. The project will cover rural and urban roads, including routes linking farms to markets.

The council also approved investment in non-intrusive inspection scanners and technical support for the Nigeria Customs Service. The equipment is expected to speed up cargo clearance, improve the detection of misdeclared goods and strengthen efforts to intercept contraband and illegal weapons.

Government Highlights Economic Indicators

During the briefing, Oyedele defended the Tinubu administration’s economic reforms, comparing current indicators with conditions when the government took office in May 2023.

He said inflation stood at 22.41 per cent at the time, while net foreign reserves were below $1bn. He also claimed that the previous administration had printed more than ₦30tn to finance spending, arguing that the resulting monetary pressures continued to affect prices.

The minister said the government’s debt-service-to-revenue ratio had fallen from 97 per cent in 2023 to below 60 per cent, while economic growth increased from 2.74 per cent in May 2023 to 4.43 per cent in the second quarter of 2026.

He also reported that inflation fell to 14.63 per cent in September 2026, compared with 20.98 per cent a year earlier. The figures were presented as evidence of improving macroeconomic conditions, although the minister acknowledged that many Nigerians continued to face economic hardship.

Oyedele said foreign reserves had risen to more than $55bn, with net reserves exceeding $45bn, compared with less than $1bn three years earlier. He added that Nigeria’s tax-to-GDP ratio had increased from about seven per cent in 2023 to approximately 12.5 per cent at the end of 2025.

The minister attributed the changes to the administration’s reforms, including the removal of petrol subsidies and adjustments to foreign exchange policy.

He said the government had also introduced measures to cushion the effects of economic reforms, including student loans, cash transfers to vulnerable households and subsidised credit for small businesses.

According to him, the Nigerian Education Loan Fund had disbursed ₦372.6bn to more than 1.5 million students, while over 10 million households had received cash transfers worth more than ₦600bn.

He added that more than 800,000 micro, small and medium-sized enterprises had benefited from subsidised loans and that tax exemptions had been introduced for eligible low-income earners and small businesses.

 FG Targets Lower Food Prices

Oyedele said the Federal Executive Council had adopted a priority resolution to stabilise food prices and work towards single-digit inflation by the end of 2027 or earlier.

He explained that the government was coordinating with state governments under a 90-day action plan developed through the National Economic Council to address food supply and affordability.

In the short term, the government intends to stabilise or reduce prices of major staples, including rice, yam, beans and maize, before the end of the year.

Oyedele said authorities would assess the gap between domestic food production and consumption to determine whether targeted imports were necessary. He added that any rice imports under the plan would be limited to unprocessed brown rice to protect local milling and processing jobs.

Over the longer term, the government plans to expand irrigation farming, improve crop yields through scientific methods and reduce post-harvest losses.

The minister said the administration intended to increase domestic food production, make prices more affordable and expand exports of processed agricultural products.

The borrowing proposal has attracted criticism from opposition figures, including African Democratic Congress presidential candidate Atiku Abubakar, who has urged the National Assembly to suspend consideration of the request until the government publishes details of the projects to be financed.

The proposal remains subject to legislative scrutiny and approval by the National Assembly.