The Federal Government has defended the $21.7 billion borrowing proposal transmitted to the National Assembly by President Bola Tinubu, stating that the funds are strictly for investments in capital assets rather than for consumption.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, issued the clarification shortly after the Federal Executive Council (FEC) meeting at the Presidential Villa in Abuja.
Oyedele explained that $10.6 billion of the loan is allocated for critical transport infrastructure, including the Sokoto-Badagry Highway, the Lagos-Calabar Coastal Highway, and the Kano-Kaduna Metro Rail. He disclosed that $3.3 billion is earmarked for state government projects, while an additional $1.45 billion is set aside for the Federal Capital Territory (FCT).
The minister revealed that over $7.9 billion of the proposed debt will be sourced from multilateral and bilateral development partners, led by a $5 billion facility from the World Bank. He explained that these funds will attract a concessionary average interest rate of approximately 2.1 per cent.
“Borrowing to consume is harmful, but borrowing ₦1 to build transformative assets worth more than ₦1 creates net positive wealth for the country,” Oyedele stated.
Meanwhile, the minister also stated that the government has disbursed ₦372.6 billion under the Nigerian Education Loan Fund (NELFUND) to over 1.5 million students and distributed over ₦600 billion to 10 million households, with plans to expand the safety net to 15 million vulnerable families.
He also revealed that the Bank of Industry (BOI) has provided single-digit interest loans to over 800,000 Micro, Small and Medium Enterprises (MSMEs) nationwide. He affirmed that the Federal Executive Council has fully adopted the 90-day execution framework established by the National Economic Council (NEC) to enforce fiscal discipline.
During the session, the FEC approved 10 memos submitted by the Finance Ministry, including a €155.9 million credit facility arranged by Deutsche Bank to construct five new 132/33kV substations under Phase 1 of the Presidential Power Initiative (PPI). The council also approved a $970 million syndicated 10-year facility led by Standard Chartered Bank and the Africa Finance Corporation (AFC) for rolling stock on the Kano-Maradi rail line.
The cabinet approved a €76.8 million credit from the ECOWAS Bank for Investment and Development (EBID) for Bauchi State to develop urban-rural road networks and farm-to-market transit corridors. The council also sanctioned direct investments in non-intrusive cargo inspection scanners for the Nigeria Customs Service to accelerate port clearance operations and combat the smuggling of illicit arms.
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