Nigerian parliament approves $2.85 billion foreign borrowing plan, including debut sukuk

Nigeria's National Assembly has approved President Bola Tinubu's request to raise $2.85 billion in foreign borrowing to support the government's fiscal and economic objectives, including the country's first-ever foreign-denominated sukuk, marking a major milestone in Nigeria's participation in global Islamic finance.

Introduction of the First Sovereign Sukuk

A notable component of the package is the $500 million debut sukuk issuance—Nigeria's first in international markets.

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  A sukuk is an Islamic financial certificate similar to a bond in conventional finance, but it must comply with Sharia (Islamic law), which prohibits interest. Instead, investors earn returns from underlying asset performance or profit-sharing rather than fixed interest payments.

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  This sukuk will be issued to attract foreign capital from Islamic finance markets, particularly from the Middle East and Southeast Asia, where demand for Islamic finance instruments is strong.

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  The issuance aligns with Nigeria's broader strategy to diversify its funding sources beyond traditional Eurobonds and syndicated loans.

The Debut Sukuk

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  Diversify Nigeria's investor base, attracting capital from the Middle East and Southeast Asia, where demand for Islamic finance instruments is strong.

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  Demonstrate Nigeria's financial innovation and alignment with international best practices in sovereign debt management.

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  Deepen Nigeria's domestic Islamic finance market and alignment with international best practices in sovereign debt management, reduce dependence on interest-bearing instruments and take advantage of the liquidity and diversified funding sources—all aimed at supporting the administration's economic renewal agenda and infrastructure drive.

Legislative and Fiscal Context

The approval follows President Tinubu's formal request to the National Assembly earlier this year for authorization to access external financing to stabilize the economy and fund the country's first-ever foreign-denominated sukuk, marking a major milestone in Nigeria's participation in global Islamic finance.

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  Lawmakers supported the proposal after reviewing its expected benefits for economic growth, fiscal balance, and infrastructure delivery. The borrowing is seen as a necessary step to bridge revenue shortfalls and maintain access to international capital markets.

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  The sukuk component is particularly significant as it reflects Nigeria's commitment to responsible debt management, fiscal discipline, and diversified funding sources—all aimed at supporting the administration's economic renewal agenda and infrastructure drive.

Broader Economic Significance

By backing this $2.85 billion package (and especially the debut sukuk), Nigeria aims to:

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  Reassure international markets of its commitment to debt servicing and fiscal discipline.

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  Leverage alternative financing to reduce dependence on conventional debt instruments and take advantage of the liquidity in Islamic finance markets.

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  Fund critical projects in key sectors such as transport, power, education, and healthcare, in line with the government's strategic development priorities.