Abuja, Nigeria — President Bola Tinubu has written to the National Assembly seeking approval for a fresh $2.3 billion external loan and the issuance of a $500 million sovereign Sukuk in what would mark Nigeria’s debut in the international Islamic finance market.
The request, contained in a letter read by Speaker Tajudeen Abbas on the floor of the House of Representatives on Tuesday, was made in accordance with Sections 21(1) and 27(1) of the Debt Management Office (DMO) Establishment Act, 2003.
According to the letter, the proposed external borrowing is aimed at financing the 2025 Appropriation Act, refinancing maturing Eurobonds, and expanding Nigeria’s debt instruments to include Islamic finance products.
President Tinubu explained that the 2025 fiscal framework anticipates a total of $9.27 billion in new borrowings to address the budget deficit, with $1.84 billion expected to be sourced externally at an exchange rate of ₦1,500 to the dollar. He stated that the funds would be raised through various instruments, including Eurobonds, syndicated loans, bridge financing, or direct loans from multilateral institutions, to optimise cost and manage risk effectively.
A major component of the plan is the refinancing of Nigeria’s $1.118 billion Eurobond issued in 2018 at a coupon rate of 7.625 percent, which is due for maturity in November 2025. The President noted that such refinancing is standard practice in debt capital markets and is designed to guarantee debt sustainability and enhance investor confidence. He emphasised that refinancing maturing obligations remains a vital aspect of prudent debt management and a key factor in maintaining fiscal credibility.
Tinubu’s letter also unveiled the federal government’s plan to issue a $500 million international sovereign Sukuk, a move expected to strengthen Nigeria’s participation in the global Islamic finance arena. The President said the initiative follows the success of previous domestic Sukuk issuances, which have raised a total of ₦1.39 trillion since 2017 to fund critical infrastructure projects, particularly in road construction.
He added that the proposed international Sukuk would help close Nigeria’s infrastructure financing gap while diversifying its investor base. To enhance the offering’s attractiveness, the government is considering a credit enhancement guarantee from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank Group.
“If the ICIEC credit guarantee is utilised, 25 percent of the proceeds will be used to repay relatively expensive debt obligations, while the balance will finance pre-identified infrastructure projects,” the President stated.
Tinubu assured lawmakers that the Federal Ministry of Finance and the DMO would engage reputable transaction advisers to secure favourable terms amid global market volatility. He expressed confidence that Nigeria’s reputation as a credible and consistent issuer in international capital markets would strengthen investor trust and support the country’s long-term fiscal strategy.
The President’s new borrowing request comes as Nigeria continues to confront the dual challenges of funding a significant budget deficit and managing an expanding debt portfolio. As Africa’s largest economy, the government is working to balance its infrastructure-driven growth agenda with the need to maintain debt sustainability.
Analysts believe the move underscores a pragmatic approach to fiscal management, given rising inflation, currency fluctuations, and high global interest rates. They note that Nigeria’s success with domestic Sukuk issuances demonstrates the potential of Islamic finance as a sustainable tool for funding development projects.
Experts also say that the proposed involvement of the ICIEC guarantee could reduce borrowing costs by improving Nigeria’s credit standing, while the decision to allocate part of the proceeds toward repaying expensive debts reflects a cautious and strategic effort to strengthen the nation’s fiscal stability.
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