Reps Approve Tinubu’s Request to Borrow $2.35 Billion, Issue $500 Million Sovereign Sukuk

The House of Representatives has approved President Bola Tinubu’s request to raise US$2.35 billion in external borrowing, and to issue a US$500 million sovereign sukuk, as part of measures to address the 2025 budget deficit and diversify Nigeria’s funding-sources. 

🔍 Key Details

• The borrowing request covers the 2025 budget and includes both new external borrowing and refinancing existing obligations. 

• The sovereign sukuk is Nigeria’s debut issuance of its kind, intended for the international capital market, to fund infrastructure projects and broaden investor participation. 

• According to the report of the House Committee on Aids, Loans and Debt Management, the approved implementation includes about ₦1.84 trillion (equivalent to approximately US$1.23 billion at the budget exchange rate of N1,500/US$1) as provided for in the 2025 Appropriation Act. 

• President Tinubu said that the funds would be raised through instruments including eurobonds, loan syndications, bridge financing or other combinations depending on market conditions. Yields are projected to be in the 6.8-9.3 % range depending on maturity. 

• On the sukuk, the President proposed that 25 % of the proceeds may be used to repay high-cost existing debt while the remainder would be directed into infrastructure financing. 

⚖ Why This Matters

• The approval signals that the government is pursuing aggressive external financing to bridge budget shortfalls, indicating both urgency and high stakes for fiscal management.

• Issuing a sovereign sukuk is a strategic move to deepen Nigeria’s securities market and attract different investor classes, including Islamic finance investors.

• Because borrowing and debt servicing will increase public obligations, the success of these instruments will depend heavily on transparency, economic growth, and effective use of the funds.

• The infrastructure objective is ambitious: funds must be used efficiently and projects delivered on time for the borrowing to generate meaningful returns and avoid exacerbating debt risks.

✅ What to Watch

• How the borrowed funds and sukuk proceeds are managed: whether they are channelled into productive infrastructure rather than recurrent spending.

• The terms of issuance (interest/yield, maturity, guarantee) and how Nigeria’s creditworthiness affects those terms.

• The impact on public debt metrics and whether this borrowing places additional pressure on fiscal sustainability.

• Whether the infrastructure projects designated receive monitoring, evaluation and transparency in execution.

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