Tinubu’s $21.5 Billion Loan Request: What It Really Means for Nigeria’s Economy, According to the Federal Ministry of Finance
President Bola Ahmed Tinubu recently submitted a $21.5 billion external borrowing request to the National Assembly, sparking widespread discussions and concerns among Nigerians about the country's growing debt profile. However, the Federal Ministry of Finance has come forward to clarify that this request does not automatically mean an increase in Nigeria’s debt burden.
On May 27, 2025, President Tinubu formally wrote to the National Assembly, asking for approval of a new borrowing plan. This plan includes two main components:
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A total external borrowing of $21.5 billion, which the government says is aimed at funding critical sectors of the economy.
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An additional request to issue federal government bonds worth N757.9 billion to clear outstanding pension liabilities under the Contributory Pension Scheme (CPS).
These figures have caused some public anxiety, especially considering Nigeria’s current debt situation. But in a statement released the same day, Mohammed Manga, the Director of Information and Public Relations at the Ministry of Finance, offered important clarifications.
What Is the Purpose of the $21.5 Billion Loan?
According to the ministry, this external loan request is not just about borrowing for borrowing’s sake. Instead, it is part of what they call a “Debt Rolling Plan”, which aims to bring structure and strategy to how Nigeria borrows money.
“The Debt Rolling Plan is not an automatic green light for increasing the debt burden. It is a strategic framework that guides sustainable and purposeful borrowing,” the ministry said in its official statement.
In essence, this plan is a long-term approach to debt management, replacing the more reactive, short-term borrowing strategies of the past. The aim is to tie every kobo of borrowed money to specific, growth-enhancing projects that can ultimately contribute to Nigeria’s economic development.
Where Will the Money Come From?
Another key point emphasized by the Federal Ministry of Finance is that most of the funding will come from international development partners. These include:
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The World Bank
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African Development Bank (AfDB)
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China EximBank
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Japan International Cooperation Agency (JICA)
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French Development Agency
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European Investment Bank
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Islamic Development Bank
These institutions typically provide concessional loans, meaning the terms are much more favorable compared to commercial loans. They often include low interest rates, longer repayment periods, and sometimes even grace periods before repayment begins.
This type of borrowing is generally considered safer and more sustainable, especially for developing countries like Nigeria that need to invest heavily in infrastructure and social services without being weighed down by high-interest debt.
What Will the Loan Be Used For?
The Ministry of Finance says that the borrowed funds will be strictly targeted at key economic sectors, including:
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Infrastructure Development
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Transportation
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Energy and Power Supply
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Agriculture and Food Security
These are sectors that have a direct impact on the daily lives of Nigerians and are essential for long-term economic growth and development. Improving roads, expanding railways, boosting power supply, and supporting farmers can create jobs, increase productivity, and reduce poverty.
“Our borrowing strategy is guided not by the volume of loans but by their utility, sustainability, and the economic value they generate. Each facility will be strictly tied to growth-enhancing projects,” the ministry explained.
In other words, it's not about how much Nigeria is borrowing—it’s about what the money will do for the country.
What About Nigeria’s Current Debt Profile?
Understandably, many Nigerians are worried about the country’s growing debt levels. As of early 2025, Nigeria's total public debt was already over N97 trillion, according to data from the Debt Management Office (DMO).
However, the Ministry of Finance insists that the new borrowing plan does not automatically mean a higher debt burden. The strategy is to replace expensive or inefficient loans with more structured, concessional financing, which can be repaid over a longer period and with lower interest.
More importantly, the ministry says that Nigeria is working hard to keep its debt within sustainable limits.
How Will Nigeria Repay These Loans?
To support the new borrowing framework, the Federal Government is also introducing major reforms in taxation and revenue generation. These reforms are aimed at increasing government income without overburdening the average Nigerian.
“We are committed to fiscal discipline, transparency, and accountability. Legislative oversight and public engagement are key to building long-term economic stability and inclusive national prosperity,” the ministry added.
These reforms include:
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Expanding the tax base by capturing more businesses and individuals under the tax net
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Improving tax collection efficiency
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Digitalizing revenue systems to reduce leakages and fraud
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Cutting down on wasteful government spending
According to the ministry’s spokesperson, Mohammed Manga, these measures are expected to reduce Nigeria’s reliance on external borrowing over time.
“The administration's tax reform agenda and revenue enhancement measures are expected to significantly improve financial management and reduce reliance on external borrowing,” he emphasized.
The N757.9 Billion for Pension Liabilities
Apart from the external borrowing request, President Tinubu also requested approval to issue N757.9 billion in federal government bonds. The goal here is to settle unpaid pension liabilities under the Contributory Pension Scheme (CPS).
This move is particularly important for retired civil servants who have been waiting for their pensions. It reflects the administration’s commitment to social welfare and honoring financial obligations to Nigerians who served the country.
By using bonds, the government spreads the financial impact over a longer period rather than paying the entire amount from its current revenue, which is already stretched.
What This Means for the Average Nigerian
While large figures like $21.5 billion can seem alarming, the key takeaway is that this borrowing plan is meant to invest in Nigeria’s future, not just plug budget holes.
If implemented properly, the loan could:
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Improve power supply
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Expand transportation networks
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Boost food production and security
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Create thousands of jobs
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Strengthen the economy for years to come
But all of this depends on transparency, accountability, and proper project execution—areas where the government will need to prove its seriousness.
Final Thoughts: Cautious Optimism
Nigerians have every right to be skeptical, especially given past experiences with poor debt management and misused loans. However, this time, the Ministry of Finance is pushing for a more strategic, transparent, and long-term approach to borrowing.
The Debt Rolling Plan is not just a blank cheque. It’s a blueprint that aims to make sure every borrowed dollar works for the people.
“Our borrowing strategy is guided not by the volume of loans but by their utility, sustainability, and the economic value they generate,” the Ministry reiterated.
The ball is now in the government’s court to ensure that these funds are used wisely, and that Nigeria does not slip deeper into unsustainable debt.
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