FG Defends $21.7bn Foreign Loan Plan, Says Projects Will Boost Growth — Oyedele

The Federal Government has defended its proposed $21.7 billion external financing programme, insisting that the plan is aimed at building productive assets, expanding infrastructure and supporting long-term economic growth rather than merely increasing Nigeria’s debt burden.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, gave the explanation after the Federal Executive Council (FEC) meeting chaired by President Bola Tinubu at the Council Chamber of the Presidential Villa in Abuja.

According to Oyedele, the five-year financing proposal is intended to support projects whose economic returns and long-term value would exceed the cost of securing the funds.

He listed transportation, defence and security, health, agriculture, energy, digital infrastructure, small businesses, social protection, environmental protection and education among the sectors expected to benefit.

Transportation accounts for the largest share of the proposed plan, with about $10.6 billion earmarked for infrastructure projects. These include the Sokoto-Badagry and Lagos-Calabar coastal highways and the Kano-Kaduna Metro Rail project.

Oyedele clarified that the $21.7 billion proposal had been presented to the National Assembly as a financing plan. He emphasised that it did not indicate that the entire sum had already been borrowed or would automatically be drawn down in full.

He explained that the Federal Government was coordinating external financing for projects across federal and state governments and other public-sector institutions.

Of the proposed amount, approximately $4.8 billion would support projects involving state governments, the Federal Capital Territory, other subnational entities, agencies and development finance institutions.

The minister said about $7.9 billion would be obtained from bilateral and multilateral development partners, including $5 billion from the World Bank at concessional rates averaging 2.1 per cent.

For the commercial component, he put the indicative average interest rate at 7.8 per cent, which he said was below the rate on Nigeria’s November 2025 Eurobond.

He maintained that external borrowing could strengthen the country’s financial position where the resulting investments generated assets and economic returns greater than the financing costs.

Using the Dangote Refinery as an illustration, Oyedele argued that large-scale projects sometimes require external funds to be delivered within a reasonable period, adding that Nigeria should pursue similar financing approaches for major infrastructure projects.

Economic Indicators Improve, But Challenges Remain

The minister also used the briefing to defend the administration’s economic reforms, saying several key indicators had improved since Tinubu launched major policy changes in May 2023.

He nevertheless acknowledged that the country continued to face significant economic difficulties.

Oyedele recalled that inflation was 22.41 per cent when the reforms began, while net foreign reserves stood at an estimated $859 million, insufficient to finance a month’s imports.

He said the economy was also grappling with multiple exchange rates, a gap exceeding 60 per cent between official and parallel-market rates, and debt-service obligations that consumed about 97 per cent of government revenue.

The minister argued that the reforms were necessary to correct structural weaknesses that threatened economic stability. Without them, he said, Nigeria could have experienced runaway inflation and a further depreciation of the naira.

He reported that economic growth climbed from 2.74 per cent in 2023 to 4.43 per cent in the second quarter of 2026, while inflation dropped to 14.63 per cent in September from 20.98 per cent in the corresponding period a year earlier.

Foreign reserves, according to him, had increased to more than $55 billion, with net reserves exceeding $45 billion, compared with less than $1 billion three years ago.

Oyedele added that the naira had stabilised within the N1,330-N1,350 range against the dollar. He also cited an International Monetary Fund estimate that the currency was undervalued by approximately 25 per cent.

The country’s tax-to-GDP ratio, he said, rose from around seven per cent in 2023 to 12.5 per cent by the end of 2025, while the debt-service-to-revenue ratio fell from about 97 per cent to below 60 per cent.

He further disclosed that Federation Account revenue grew by 44 per cent between 2024 and 2025, with the government forecasting an increase of at least 50 per cent in 2026.

The minister attributed improved international confidence to credit-rating upgrades, positive outlooks from rating agencies and Nigeria’s removal from the Financial Action Task Force’s grey list and the European Union’s list of high-risk jurisdictions.

Over N372bn Disbursed to Students Under NELFUND

Oyedele said the administration’s economic programme had also provided financial assistance to households, students and businesses.

He disclosed that the Nigerian Education Loan Fund had disbursed more than N372.6 billion to over 1.5 million students.

The government had also paid out more than N600 billion in cash transfers to over 10 million households, he said, adding that the programme was targeting at least 15 million beneficiary households.

More than 800,000 micro, small and medium-sized enterprises had also obtained subsidised loans carrying single-digit interest rates, largely through the Bank of Industry.

The minister highlighted tax relief measures, saying individuals earning up to N100,000 monthly had been exempted from personal income tax.

He added that small businesses with annual turnover of no more than N100 million had been exempted from corporate income tax, value-added tax collection and withholding-tax obligations, subject to the relevant provisions of the law.

Oyedele also pointed to the growth of the Nigerian capital market, whose value he said had increased from approximately N30 trillion to more than N160 trillion over three years.

FEC Sets Single-Digit Inflation Target

Despite the improvements outlined, Oyedele said the Federal Executive Council recognised that the high cost of living, especially food prices, remained a major concern.

He said the council agreed to intensify measures to improve living standards and set a target of reducing inflation to single digits by the end of 2027 or earlier.

Food-price stability, critical infrastructure, human-capital development and job creation were identified as key priorities.

The FEC also endorsed the National Economic Council’s 90-day action plan, which seeks to ease living costs through coordinated interventions by federal, state and local governments.

Council Reviews €155.9m Power Facility, $970m Rail Loan

Oyedele said the FEC considered 10 memoranda presented by his ministry, including proposals covering power transmission, railway infrastructure, roads and the modernisation of customs operations.

Among the financing arrangements was a €155.9 million credit facility organised through Deutsche Bank and other lenders for five substations and related transmission infrastructure under Phase One of the Presidential Power Initiative.

The project is expected to strengthen electricity supply reliability for homes and businesses and contribute to lower energy costs.

The council also considered a $970 million syndicated term loan arranged by Standard Chartered and the Africa Finance Corporation for rolling stock on the Kano-Maradi railway line.

Oyedele said the railway project was expected to reduce freight expenses, encourage regional trade and improve logistics along the northern economic corridor.

Another facility, valued at €76.8 million and provided by the ECOWAS Bank for Investment and Development, was approved for Bauchi State’s transport infrastructure programme. It will cover rural and urban roads, including routes linking agricultural production areas with markets.

The FEC also approved investment in non-intrusive inspection scanners for the Nigeria Customs Service, alongside technical support, repairs and maintenance.

The scanners are expected to speed up cargo processing, strengthen anti-smuggling operations and improve the identification of prohibited goods and dangerous weapons.

Oyedele reiterated that the government remained committed to fiscal discipline and investments in infrastructure and social development.

He stressed that the success of the $21.7 billion financing plan would ultimately be measured by the economic value generated by the projects and the tangible benefits delivered to Nigerians.

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