• Parliament authorizes up to $2.85 billion in external borrowing
• Plan includes a $500 million sovereign sukuk, the country’s first in foreign currency
• Funds to finance the 2025 deficit and refinance maturing Eurobonds

Nigeria’s Parliament has approved a plan allowing the government to borrow up to $2.85 billion on international markets. The proposal, submitted by President Bola Ahmed Tinubu and endorsed on October 29 includes issuing a $500 million sovereign sukuk — the country’s first Islamic bond denominated in foreign currency.

The operation aims to partially finance the 2025 budget deficit and refinance Eurobonds reaching maturity. Funds could be raised through Eurobonds, syndicated loans, bridge financing, or direct borrowing from international banks. The government expects the move to stabilize public finances and broaden Nigeria’s foreign investor base, as external debt and naira weakness continue to weigh on the federal budget.

Domestically, Nigeria has maintained an active sukuk issuance policy. In May 2025, the Debt Management Office (DMO) raised ₦300 billion (about $190 million) through a 10-year ijarah sukuk to finance road and education projects. The issue was oversubscribed by 735%, showing strong investor appetite for Islamic-compliant instruments. Since 2017, Nigeria has mobilized over ₦1.39 trillion through sukuk bonds.

If issued in the coming months, the $500 million sukuk would mark Nigeria’s first entry into the international Islamic finance market, aiming to attract investors from the Middle East and Asia while diversifying its funding sources. Unlike conventional bonds, sukuks are backed by real assets and based on profit-sharing rather than interest, which is prohibited under Islamic law.

Despite inflation easing to around 18% in September 2025, down from more than 30% in 2024, and public debt near $97 billion, Nigeria still faces tight fiscal conditions. Oil revenues remain below expectations, limiting fiscal space. For President Tinubu, the success of this borrowing plan will test market confidence and mark a key step toward fiscal consolidation.