Much Ado About Nigeria’s Rising Loan Profile

President Bola Tinubu’s quest for a $516.3 million foreign loan for the construction of Sokoto–Badagry Superhighway has intensified debate over infrastructure financing and debt sustainability, as critics including ex-Vice President, Atiku Abubakar and 16th Emir of Kano, Muhammadu Sanusi II warn against Nigeria’s rising borrowing profile. Sunday Aborisade reports.

President Bola Tinubu’s formal request to the National Assembly for approval of a $516.3 million syndicated foreign loan for the Sokoto–Badagry Superhighway has opened a fresh chapter in Nigeria’s long-running debate over infrastructure financing and debt sustainability, pitching the promise of economic transformation against mounting concerns over fiscal prudence.

The request, transmitted to the Senate last Thursday and anchored on Sections 16 and 21 of the Debt Management Office (Establishment) Act, 2011, seeks legislative endorsement for a financing arrangement structured through Deutsche Bank and backed by a partial risk guarantee from the Islamic Corporation for the Insurance of Investment and Export Credit.

It also asks for the inclusion of the facility in the Federal Government’s borrowing plan and approval for the execution of the first 120 kilometres of the highway project.

At nearly 1,000 kilometres, the Sokoto–Badagry Superhighway is conceived as a strategic corridor linking Sokoto, Kebbi, Niger, Kwara, Oyo, Ogun, and Lagos states, stretching from Illela in the far northwest to Badagry on the Atlantic coast.

Designed as a high-capacity carriageway with provision for future rail integration and utility infrastructure, the project is positioned as a flagship initiative under the administration’s Renewed Hope Agenda.

Government projections suggest that the highway could significantly reduce travel time between Sokoto and Lagos, improve road safety, lower logistics costs, and enhance trade flows, particularly in agricultural commodities.

By connecting production centres in the north to markets and ports in the south, the project is also expected to strengthen food security and promote national integration.

These arguments found resonance within the Senate during initial deliberations on the President’s request.

Senator Adamu Aliero described the project as a landmark initiative that had lingered on the drawing board for more than five decades, noting that construction had already commenced in some sections.

He pointed to the use of reinforced concrete technology and solar-powered lighting as evidence of adherence to modern infrastructure standards, while emphasising the transformative impact the road could have on multiple regions of the country.

Senate President, Senator Godswill Akpabio also aligned with this position, characterising the superhighway as a major economic game changer capable of boosting productivity and saving lives.

He argued that borrowing for critical infrastructure should be viewed as a strategic investment, particularly when such projects have the potential to generate long-term economic value and support repayment.

Following the presentation, the Senate referred the request to its Committee on Local and Foreign Debts with a directive to report back within one week, underscoring the urgency attached to the proposal and the expectation of swift legislative action.

However, outside the National Assembly, the proposed borrowing has drawn pointed criticism from prominent political and economic voices, reflecting broader unease about Nigeria’s rising debt profile and the sustainability of its fiscal trajectory.

According to newspaper reports, Nigeria’s total public debt stood at ₦159.28 trillion (approx. US$110.3 billion) as of December 31, 2025, with an average debt burden of ₦724,000 per citizen.

Driven by naira depreciation and new borrowing, this figure includes federal and state domestic/external obligations, with over 92% attributed to the federal government.

Former Vice President Atiku Abubakar is among the most vocal critics of the administration’s borrowing strategy, repeatedly cautioning that continued reliance on external loans without commensurate revenue growth could deepen the country’s fiscal vulnerabilities.

He has argued that while infrastructure development is essential, it must be pursued within a framework that prioritises efficient resource utilisation, transparency, and a clear pathway to economic returns.

Atiku has also stressed the need for the government to focus more aggressively on expanding non-oil revenue sources, improving tax administration, and curbing leakages, warning that excessive borrowing risks mortgaging the country’s future without delivering proportional benefits to citizens.

Similarly, the 16th Emir of Kano, Muhammadu Sanusi II, a respected economist and former central bank governor, has raised concerns about the broader implications of Nigeria’s debt accumulation.

Sanusi has consistently emphasised that borrowing, in itself, is not inherently problematic, but becomes risky when not tied to productive investments that can generate sufficient returns to service the debt.

He has urged policymakers to adopt a more disciplined approach to public finance, warning that weak revenue performance and rising debt servicing obligations could constrain the government’s ability to fund essential services and invest in human capital.

For Sanusi, the challenge is not merely about how much Nigeria borrows, but how effectively borrowed funds are deployed.

These criticisms add a layer of complexity to the debate over the Sokoto–Badagry Superhighway, highlighting the tension between developmental ambition and fiscal responsibility.

On one hand, Nigeria faces a significant infrastructure deficit that continues to hinder economic growth and competitiveness while on the other, its fiscal space remains constrained, with debt servicing consuming a substantial share of government revenue.

The proposed loan itself carries a tenure of nine years, including a grace period of up to three years, with an interest rate tied to the Chicago Mercantile Exchange Secured Overnight Financing Rate plus 5.3 per cent.

In addition, the Federal Government is expected to provide counterpart funding of over N265.5 billion for land acquisition, compensation, and related infrastructure.

For proponents, these terms are within acceptable bounds, particularly given the involvement of reputable financial institutions and the backing of a multilateral guarantee.

They argue that the long-term economic benefits of the project, ranging from reduced transportation costs to increased trade and investment, could outweigh the immediate fiscal burden.

Yet, sceptics remain unconvinced, pointing to past experiences where large-scale infrastructure projects failed to deliver anticipated returns or were plagued by delays and cost overruns.

They caution that without robust oversight, transparency, and accountability, even well-intentioned projects can become fiscal liabilities.

Public perception will likely play a decisive role in shaping the outcome of this debate.

For many Nigerians, the credibility of infrastructure initiatives is closely tied to their execution.

Visible progress, adherence to timelines, and demonstrable impact on daily life are critical factors in building trust and support.

The Tinubu administration, therefore, faces a delicate balancing act. It must not only secure legislative approval for the proposed borrowing but also ensure that the project is implemented efficiently and delivers tangible benefits.

Success could reinforce confidence in its economic agenda and strengthen its political standing. Failure, however, could amplify criticisms and deepen concerns about governance and fiscal management.

As the Senate Committee on Local and Foreign Debts undertakes its review, attention will focus on key issues such as the sustainability of the loan, alignment with the national borrowing plan, and the overall feasibility of the project.

Lawmakers are expected to weigh the potential economic gains against the fiscal risks, a process that will test both their oversight role and their responsiveness to public concerns.

Ultimately, the Sokoto–Badagry Superhighway represents more than a single infrastructure project. It embodies the broader choices facing Nigeria as it seeks to navigate the path to sustainable development, choices that involve difficult trade-offs between immediate needs and long-term stability, between ambition and caution.

Whether the project proceeds as planned or undergoes modifications, the debate it has sparked is likely to endure, shaping policy discussions on borrowing, infrastructure, and economic strategy for years to come.

In this sense, the highway is not just a physical link between regions, but a focal point for national reflection on how best to build the future without compromising fiscal health.