Nigeria Approves $2.85 Billion Foreign Borrowing Plan, Including First Sovereign Sukuk

Abuja, Nigeria — Nigeria’s parliament on Wednesday approved President Bola Tinubu’s proposal to borrow $2.85 billion from international debt markets, including the nation’s first-ever sovereign sukuk, as the government seeks to bridge its fiscal deficit and strengthen external financing flexibility.

The approval follows a formal request submitted earlier this month, in which Tinubu sought authorization to raise the funds through multiple channels including Eurobond issuance, loan syndication, bridge financing, or direct borrowing from international banks.

“The new funding will help part-finance the 2025 budget deficit and refinance maturing Eurobonds due in November,” Tinubu said in his earlier communication to lawmakers.

Debut Sovereign Sukuk

The borrowing package includes a landmark $500 million debut sovereign sukuk, marking Nigeria’s first entry into the global Islamic finance market.

The issuance is expected to attract liquidity from Middle Eastern and Asian investors seeking Sharia-compliant assets, deepening Nigeria’s participation in diversified capital markets.

Analysts say the sukuk could set a precedent for future Islamic bond issuances by Nigerian corporates and subnational entities, expanding access to alternative financing amid constrained global credit conditions.

Fiscal Context

Nigeria’s federal budget continues to face mounting fiscal pressures due to weak oil revenues, rising debt service costs, and persistent infrastructure financing needs.

The approved $2.85 billion facility is part of the government’s broader financing strategy to reduce reliance on domestic borrowing and mitigate refinancing risks linked to Eurobond maturities.

The Debt Management Office (DMO) recently estimated Nigeria’s total public debt at ₦152.4 trillion ($99.7 billion) as of mid-2025 up 2.5% quarter-on-quarter underscoring the country’s increasing dependence on external financing sources.

Strategic Implications

Economists see the new borrowing plan as both a fiscal lifeline and a market signal. While the move will temporarily ease short-term refinancing pressure, it also underscores the need for stronger fiscal consolidation and revenue mobilization.

The planned sukuk issuance could also help Nigeria tap into a broader investor base, potentially lowering borrowing costs compared with conventional debt instruments.

Bottom Line:

Nigeria’s $2.85 billion foreign borrowing approval, anchored by its first sovereign sukuk, marks a milestone in the country’s evolving debt strategy. The move demonstrates an effort to balance fiscal sustainability with market diversification even as elevated debt levels continue to challenge Africa’s largest economy.