ABUJA, Nigeria — A prominent policy think tank has mounted a robust defence of President Bola Tinubu’s aggressive borrowing strategy, arguing that utilising external and domestic debt to fund a record-breaking $23bn (£18bn) capital budget is the only viable method to rescue Nigeria from a crippling infrastructure deficit.
The Independent Media and Policy Initiative (IMPI) issued a policy statement on 17 May 2026 to counter growing criticism from political opposition groups and corporate advocacy bodies. These critics have heavily condemned the administration’s reliance on loans to finance national development.
According to IMPI’s data-driven assessment, critics are engaging in a “fallacy of generalisation” without offering alternative, workable solutions to modernise Africa’s largest economy.
A Multii-Trillion Dollar Deficit
Nigeria’s economic productivity and standard of living have been severely throttled by decades of inadequate public infrastructure. The think tank highlighted the scale of the crisis across several critical sectors:
- The Road Networks: Out of Nigeria’s 195,000 kilometres of roads, more than 70 per cent are in poor condition, massively inflating transit costs for farmers and small businesses.
- The Power Crisis: Despite an installed capacity of 12,500 MW, the national grid routinely delivers an average operational output of just 4,000 MW. This leaves the country’s per capita electricity consumption at a meager 144 kWh annually—far below the global average of 3,131 kWh.
- The Corporate Toll: Nigerian businesses spend an estimated $29bn (£22.7bn) annually on backup diesel generators. This severe energy deficit has directly driven the exit of major multinational corporations, including GlaxoSmithKline (GSK) and Procter & Gamble (P&G), over recent years.
To bridge this massive gap, global institutions have issued staggering cost estimates. The World Bank projects that Nigeria needs an accumulated investment of $3trn over 30 years to meet international benchmarks. The African Development Bank (AfDB) puts the figure at $2.3trn, while global audit firm KPMG estimates that a more targeted annual spending of $14.2bn over 10 years (totalling $142bn) could effectively modernise the country’s transport and digital networks.
Breaking a 25-Year Fiscal Ceiling
IMPI’s policy review exposed a perennially low threshold for capital budget execution by previous administrations. Over the past 25 years, no federal government had ever managed to successfully disburse more than $14bn for infrastructure in a single year, despite benefiting from three distinct oil booms between 2000 and 2014. Budget lines were routinely passed but consistently suffered from below-70% implementation due to revenue shortfalls and bureaucratic delays.
However, the think tank noted that the approved 2026 Appropriation Act represents an unprecedented shift in Nigeria’s fiscal history. The Tinubu administration has allocated $23bn—roughly half of the entire national budget—strictly to infrastructure and capital expenditure, matching and exceeding global benchmarks for the first time.
Why the Fuel Subsidy Savings are Not Enough
Responding to corporate advocacy groups who argue that the multi-billion naira savings from the removal of the petrol subsidy should completely fund these projects without resorting to fresh loans, IMPI described the argument as mathematically unsustainable.
The group noted that while the removal of the fiscally ruinous fuel subsidy saved Nigeria approximately $10bn annually, that subsidy itself was largely funded by accumulating debt. Because the $10bn in savings does not account for the vast scale of funding required to fix the energy and transport grids simultaneously, external financing remains an absolute necessity.
Furthermore, the think tank dismissed claims that the government should rely entirely on Public-Private Partnerships (PPPs). Empirical data show that infrastructure PPPs in Nigeria face immense hurdles, including weak legal frameworks, prolonged negotiation timelines, and high transaction costs.
This private-sector reluctance is visible in the numbers: while Nigeria’s institutional assets (including pension and insurance funds) exceed $100bn, less than 5% is invested in domestic infrastructure, compared to 15% in South Africa. Private investors, IMPI argued, will invest only after the state has demonstrated its own financial commitment by building foundational assets.
Market Confidence Amid Global Tensions
Despite concerns that heavy government borrowing might crowd out local private firms from the domestic debt market, global indicators suggest international investors are backing Abuja’s economic reforms.
Last week, yields on Nigeria’s sovereign Eurobonds fell to a record low of 6.89%, down from 8%. This drop signals an unexpected wave of positive sentiment among foreign portfolio investors, occurring even as US Treasury yields rise and global borrowing costs remain elevated. International capital markets are increasingly pricing in Nigeria’s improved macroeconomic stability, bold reform momentum, and a recent rally in crude oil prices sparked by geopolitical tensions in the Middle East.
The federal government has already greenlit a record-breaking suite of infrastructure projects to be backed by this debt policy. This includes a $2.99bn allocation for vital rail lines connecting Lagos, Kano, and Kaduna, more than ₦7trn for nationwide road and bridge rehabilitation, ₦1.096trn for the power sector, and a multi-billion dollar total reconstruction of long-neglected seaports in Apapa, Tin Can, Calabar, Warri, and Port Harcourt.
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