Mounting loans: How Nigeria is borrowing to stay afloat

By Yunusa Abubakar

As Nigeria grapples with economic reforms and rising hardship, the Federal Government under President Bola Ahmed Tinubu has increasingly turned to borrowing as a tool to stabilise the economy and fund critical sectors.

From multilateral institutions to large-scale infrastructure financing, a pattern has emerged since 2023 — one that underscores both urgent national needs and growing fiscal pressure.

Findings show that between 2024 and 2026, Nigeria secured and proposed billions of dollars in loans, targeting sectors such as healthcare, education, infrastructure, and social welfare.

In 2024, the World Bank approved a $1.57bn facility for Nigeria. The loan was directed at strengthening primary healthcare, improving education, enhancing irrigation systems, and addressing flood control challenges.

The intervention came at a time when many communities were still recovering from devastating floods and struggling with weak public service delivery.

By 2025, the country’s borrowing drive intensified. Another $1.08bn loan from the World Bank was approved, this time focusing on cushioning the impact of economic reforms on vulnerable households, while also supporting nutrition and education programmes.

That same year, the African Development Bank stepped in with a $500m budget support facility. The funding was designed to stabilise government finances and support ongoing fiscal and power sector reforms.

However, the most significant move came with the approval of an external borrowing plan exceeding $21bn by the National Assembly. The facility, covering multiple sectors, is expected to finance roads, railways, healthcare, education, housing, and security projects.

Part of the package includes funding for major railway developments, particularly along the eastern corridor — a project seen as vital for boosting trade and regional connectivity.

Peoples Daily reports that President Bola Tinubu has written to the Senate, seeking approval to borrow a fresh $516,333,070  syndicated loan to finance the construction of a 1,000km highway linking Sokoto to Badagry.

The project is expected to cut transportation costs, ease movement of goods, and strengthen the food supply chain across regions.

The highway plan follows an earlier $747m loan tied to coastal road development, further signalling the government’s focus on large-scale infrastructure.

Beyond sovereign borrowing, Federal government has also introduced targeted loan schemes. One of such is the student loan initiative managed by the Nigerian Education Loan Fund, designed to provide interest-free loans to indigent students and expand access to higher education.

Speaking with Peoples Daily, an economist, Suleiman Hussein said the borrowing spree reflects a government attempting to balance reform-induced shocks with long-term development goals.

Accorring to him“There is a clear shift towards using debt to fund infrastructure and social protection.The challenge, however, is sustainability.”

But ,Nigeria’s rising debt profile has continued to generate debate among economists and policy watchers and  concerns persist over debt servicing, which already consumes a significant portion of government revenue.

“The impact of these loans is yet to be fully felt. While projects are announced and funds secured, citizens continue to demand visible improvements in power supply, security, healthcare, and cost of living.

Wiith more loans in the pipeline, the coming years will test whether Nigeria’s borrowing strategy can deliver meaningful development — or deepen fiscal strain”, he said .