Experts Question Nigeria’s Proposed $21.7bn Loan Amid Rising Oil PricesEnergy and financial experts have raised concerns over the Federal Government’s proposed $21.7 billion external borrowing plan, questioning its timing, debt sustainability and potential impact on the country’s finances.
The concerns come amid rising crude oil prices, with energy expert and Managing Partner of The Energy Consulting Practice, Kelvin Emmanuel, arguing that Nigeria should maximise its oil revenue rather than commit future crude oil production to secure additional loans.
Speaking during an interview on Channels Television, Emmanuel said the high price of crude oil should translate into increased government revenue, making fresh borrowing less necessary.
He noted that November crude oil cargoes were reportedly selling at about $145 per barrel, arguing that the government should account for the additional revenue expected from higher oil prices before seeking further external financing.
According to him, the government has also failed to adequately account for savings from the removal of fuel subsidies and continues to overlook significant revenue leakages.
Emmanuel identified concerns over the cost of forward-sale financing agreements, citing Project Leopard as an example of expensive borrowing arrangements.
He explained that the facility carried an interest margin of between 6.5 and seven per cent, alongside additional liquidity and benchmark interest charges, which significantly increased the overall financing cost.
The energy expert also disputed the Federal Government’s position on the country’s interest-to-revenue ratio, insisting that Nigeria’s debt burden was higher than officially acknowledged.
He estimated the country’s cumulative debt stock at about N166 trillion, rather than N144 trillion, and argued that the debt-to-GDP ratio could reach 38.1 per cent when additional liabilities, including Ways and Means advances, AMCON obligations, guarantees and outstanding payments, were considered.
Emmanuel further accused the government of fiscal recklessness, arguing that weaknesses in revenue management and inadequate oversight had worsened the country’s debt situation.
He also called for stronger fiscal accountability and the effective implementation of the Fiscal Responsibility Act.
Expert Urges Tinubu to Prioritise Revenue-Generating ProjectsMeanwhile, an expert in credit administration and financial management, Asiwaju Busari Shaamsuddeen Akande, has urged President Bola Tinubu to ensure that the proposed external loans are tied strictly to projects capable of generating revenue and delivering measurable economic benefits.
Akande made the recommendation in an analysis of the borrowing plan in Calabar, Cross River State. He argued that Nigeria’s borrowing capacity should not be assessed solely through its debt-to-GDP ratio but also through its revenue-generating capacity and ability to meet debt obligations.
According to him, rising debt-servicing costs could leave the government with fewer resources for infrastructure development and essential public services.
He therefore called for strict project-level accounting, monitoring and accountability to ensure that borrowed funds are deployed for their intended purposes.
Akande recommended that the government ring-fence the loans for specific infrastructure projects, particularly port modernisation and power transmission, while conducting comprehensive cost-benefit assessments before approving funding.
He also advocated greater use of non-interest financing instruments, especially sovereign Sukuk, as an altern ative to conventional borrowing.
According to him, asset-backed Sukuk arrangements based on leasing and construction financing could attract institutional investors while promoting transparency and accountability.
The financial expert, a Fellow of the National Institute of Credit Administration and Certified Management Accountant, maintained that borrowing was not inherently harmful but warned that it could become a serious fiscal burden if the economic returns from funded projects failed to justify their financing costs.
FG Defends $21.7bn Borrowing PlanHowever, the Federal Government has defended the proposed borrowing programme, describing it as an investment in productive sectors rather than an attempt to accumulate debt.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, gave the government’s position while addressing State House correspondents after Wednesday’s Federal Executive Council meeting, presided over by President Tinubu.
Oyedele explained that the proposed financing was intended to support projects that would strengthen national productivity, stimulate economic growth and improve Nigerians’ living standards.
He argued that governments must plan ahead rather than rely on spontaneous financial decisions, stressing that the proposed facilities would provide the resources needed to execute critical development projects.
“This is investment, not borrowing,” he said.The borrowing proposal comprises $20.52 billion and €1.045 billion for projects and programmes across transportation, security, healthcare, agriculture, energy, digital infrastructure, education and social protection.
According to the minister, transportation infrastructure accounts for approximately $10.6 billion of the proposed financing, covering major projects such as the Sokoto-Badagry and Lagos-Calabar highways, as well as the Kano-Kaduna rail project.
He disclosed that about $7.9 billion would come from multilateral and bilateral development partners, including the World Bank.
Oyedele also said a $5 billion World Bank component would attract concessional financing at an average interest rate of approximately 2.1 per cent, while some social-sector facilities would carry interest rates of around two per cent.
He maintained that the government was prioritising favourable financing conditions to minimise borrowing costs and ensure that the projects delivered sustainable economic benefits.
The minister further argued that borrowing remained a common financing strategy among countries seeking to develop their economies, insisting that Nigeria was not an exception.
The government’s defence, however, comes amid growing calls from economic and financial experts for greater transparency, improved revenue mobilisation and stricter accountability in the management of public debt.
