President Bola Tinubu asked Nigeria’s National Assembly on October 26, 2026, for approval to borrow $7,707,404,882.49 externally, replacing a withdrawn $20.5 billion request.

What changed in the request?

The proposal, in a letter read by Senate President Godswill Akpabio, would finance the 2026 Appropriation Act and defence, security, transport, agriculture, power, education and healthcare. At N1,400 per dollar, it equals about N10.79 trillion.

Analysts want project-level allocations for infrastructure, deficit financing and other expenditure, plus expected returns. The sharper test is debt service to revenue, the share of government income needed to pay debt, rather than debt to gross domestic product alone.

Lagos Business School Professor Bongo Adi said debt-to-GDP may still show borrowing capacity, but he considers debt-to-revenue more useful and says Nigeria has passed a comfortable borrowing threshold.

“The real challenge we have today is that the debt service to revenue ratio is extremely high. If we add this one, I am sure it is going to cross 100 per cent, meaning that everything the country is earning will be used to service debt,” he said.

CFG Advisory Chief Executive Tilewa Adebajo said rising deficits and borrowing for recurrent spending and debt service threaten fiscal sustainability. He says the debt stock also threatens reform gains and inclusive growth.

He projects debt servicing will reach N16 trillion by end-2026, above the N12.636 trillion combined for agriculture, health, works, defence and education. Loans increasingly fund salaries and existing obligations, not capital projects.

Agusto & Co’s Ayokunle Olubunmi questioned whether past loans produced adequate returns and whether Nigeria’s borrowing costs compare favourably with peers. Borrowing had not felt efficient, he said, and should produce better results.

What could the loan cost?

Nigeria’s Eurobond (foreign-currency debt sold to international investors) record shows its borrowing costs:

• March 2022: a seven-year Eurobond at 8.375%.
• December 2024: $2.2 billion in two tranches at 9.625% and 10.375%.
• November 2025: a 10-year Eurobond at 8.63% and a 20-year instrument at 9.13%.

Used illustratively on the full $7.707 billion principal, those last two rates imply annual interest of $665.15 million at 8.63% and $703.69 million at 9.13%. Over 10 years, interest would total $6.65 billion to $7.04 billion if the whole principal stayed outstanding.

These are not confirmed terms; final rates and maturities depend on pricing conditions. Costs would also include underwriting and arrangement fees, legal and financial advice, ratings, listing and other expenses.

A bullet structure charges periodic interest, then full principal at maturity, creating refinancing risk if Nigeria cannot accumulate foreign exchange. Amortisation repays principal alongside interest. At 8% for 10 years with principal due at maturity, annual interest would be $616.56 million, cumulative interest $6.17 billion and total repayment $13.87 billion, excluding fees.

What would the money buy?

The government has named six sectors but not each project’s allocation. It should disclose locations, contract values, implementing ministries and agencies, completion dates and disbursement amounts, and say whether loans cover recurrent spending, settle obligations or refinance debt.

The test is whether funds create revenue-producing assets rather than general expenditure without matching returns.

Why does the naira matter?

The dollar loan costs more naira as the currency depreciates. A 15% to 20% fall from the N1,400 budget rate would lift principal from N10.79 trillion to N12.41 trillion-N12.95 trillion, adding N1.62 trillion-N2.16 trillion before interest and charges. The final increase depends on the outstanding principal and repayment-date exchange rates.

Developmental economist and law professor Tayo Bello said servicing dollar debt would strain reserves because repayment requires foreign currency. “The more the naira loses value, the greater the burden of servicing foreign currency denominated loans,” he said.

Adi said borrowing without more goods and services could fuel inflation and weaken the naira.

Foreign exchange comes from oil and gas, non-oil exports, diaspora remittances and foreign investment, but oil-price swings, production disruptions and capital-flow changes can unsettle receipts. Reserve and current-account improvements offer cushion; projected earnings must still cover existing and proposed external debt without adding pressure.

Why borrow despite higher revenue?

Adi questioned more debt after tax gains and fuel-subsidy savings, arguing that taxpayers were taxed, squeezed and then made to carry future borrowing costs without an explanation.

The Nigeria Revenue Service said tax collections rose 113%, from N12.3 trillion in 2023 to N27.1 trillion as of July 2026. The 2026 budget plans N68.32 trillion of expenditure against N36.87 trillion of revenue, a N31.46 trillion deficit, with borrowing a major financing source.

The Finance Ministry said the NRS generated N28.3 trillion in 2025 against a N25.2 trillion target, but collections shared across three tiers do not all reach the federal government. The IMF projects federal interest payments at 53.7% of revenue in 2026, squeezing spending on infrastructure, health, education, security and other services.

What should accompany approval?

Adi says continued borrowing shifts costs to future generations when purpose and returns are unclear; Olubunmi warns inefficiency creates liabilities. Bello favours public-private partnerships (PPPs), which share project funding and risk with private investors, while accepting that borrowing remains necessary within repayment capacity and used judiciously.

External borrowing could reduce government competition with private businesses for domestic credit, but that benefit must be weighed against foreign-exchange exposure, international rates and refinancing risk.

The National Assembly and Debt Management Office should require transparent disbursement, independent audits, procurement safeguards and periodic fund-use reports. Adebajo calls for an urgent Fiscal Responsibility Act 2007 compliance audit and publication of outstanding budget-performance reports.

Approval should rest on measurable gains in infrastructure, jobs, productivity, exports and government revenue, backed by a repayment strategy that reduces exchange-rate exposure and fresh-loan dependence. Otherwise, taxpayers and later generations inherit a larger bill without productive assets.