Tinubu seeks $516m loan for Sokoto-Badagry highway as Nigeria’s debt mounts

President Bola Tinubu has asked the Senate to approve a fresh $516.3 million external loan for the Sokoto–Badagry superhighway, adding to a growing pipeline of borrowings even as his administration posts some of the strongest revenue gains in recent years.

In a letter to lawmakers on Thursday, Tinubu said the facility—arranged through a syndicate led by Deutsche Bank—would fund Sections I, Phase IA and IB of the 1,000-kilometre corridor, covering about 120 kilometres. The project is designed to link northern agricultural centres belts to southern ports, cutting transport costs and easing trade flows.

Senate President Godswill Akpabio referred it to the Senate Committee on Local and Foreign Debts, with a report expected within a week.

Rising revenues, more borrowing

The latest request comes at a time when Tinubu’s economic polices — scrapping fuel subsidies, liberalising the exchange rate and expanding tax collection — have significantly boosted government revenues. Yet the pace of borrowing has continued, raising questions about fiscal strategy and debt sustainability.

Nigeria’s total public debt stood at ₦159.28 trillion ($110.97 billion) at the end of 2025, according to the Debt Management Office. Of that, ₦84.85 trillion was domestic, while ₦74.43 trillion ($51.86 billion) was external.

While the debt-to-GDP ratio, projected at about 32.3% by the International Monetary Fund for 2026, remains below commonly cited thresholds, the more pressing concern is repayment capacity. Debt service is consuming over 50% of government revenue in some projections.

In isolation, the $516 million facility would add roughly 1% to Nigeria’s external debt stock.

External loans also expose the country to currency risk. With obligations denominated in dollars, any further depreciation of the naira increases repayment costs in local terms, a dynamic that has intensified since the currency’s recent devaluations.

If current borrowing plans proceed, Nigeria’s total public debt is expected to exceed ₦170 trillion by the end of the second quarter.

Financing and project scope

The Sokoto–Badagry highway, stretching across Kebbi, Niger, Kwara, Oyo, Ogun and Lagos states, is positioned as a flagship infrastructure investment under Tinubu’s economic agenda. Officials say it will improve logistics efficiency, enhance food supply chains and support regional integration.

The financing package includes a partial risk guarantee from the Islamic Corporation for the Insurance of Investment and Export Credit, part of the Islamic Development Bank Group, alongside federal counterpart funding estimated at ₦265.5 billion. Additional costs cover land acquisition, compensation and related infrastructure.

Loan terms indicate a nine-year tenor, including a grace period of up to three years, with pricing at CME SOFR plus 5.3%, BusinessDay reported.