Expert urges Tinubu to explore Sukuk over fresh foreign loans

A financial expert, Asiwaju Busari Shaamsuddeen Akande, has urged the Federal Government to explore sovereign Sukuk and other non-interest financing instruments as part of efforts to fund infrastructure without worsening Nigeria’s debt burden.

Akande, who made the recommendation in Calabar while examining President Bola Tinubu’s proposed external borrowing plan, said the government should combine alternative financing with strict controls over the use of borrowed funds.

He argued that the government’s ability to repay loans should be assessed against its actual revenue rather than the country’s gross domestic product, warning that high debt-servicing costs could constrain spending on public services and development.

The expert called for project-specific accounting and monitoring to ensure that every loan was deployed for its intended purpose.

He recommended that projects such as port modernisation and power transmission should be assessed for their capacity to generate revenue, save foreign exchange or stimulate industrial production before they are financed with borrowed funds.

Akande also proposed the use of asset-backed Sukuk, including leasing and construction-financing arrangements, to attract institutional investors to infrastructure development.

He said the approach could link financing to tangible assets and project-related income while improving transparency and reducing the risk of funds being diverted to recurrent expenditure.

The financial management specialist, however, said borrowing was not necessarily bad, provided the economic benefits of the projects justified the financing costs.

He urged the Tinubu administration to disclose what the proposed loans would finance, identify the expected beneficiaries and establish how the projects would deliver economic returns.

President Tinubu has requested National Assembly approval for external borrowing facilities of $20.52bn and €1.045bn under the 2026–2027 Supplementary External Borrowing Plan.

The proposed facilities cover projects and programmes in infrastructure, agriculture, healthcare, education, water supply, security and employment generation. The request is undergoing legislative consideration.