Tinubu Seeks $5 Billion Loan from UAE: What It Means for Nigeria’s Economy

President Bola Ahmed Tinubu has formally requested the National Assembly’s approval to secure a $5 billion external loan from First Abu Dhabi Bank of the United Arab Emirates. The request is part of a larger $6 billion external borrowing plan that also includes a $1 billion UK-backed facility for port rehabilitation. The Senate has already approved the loans after receiving Tinubu’s letters during plenary. 

Tinubu asked the Senate to approve a “structured Total Return Swap (TRS) derivative external financing programme of up to $5 billion” with First Abu Dhabi Bank. He told lawmakers the facility will be disbursed in tranches and will be backed by naira-denominated federal government securities as collateral. The President requested “urgent approval” for the deal.

According to the President, if fully drawn, the $5 billion facility would raise Nigeria’s total public debt from $110.3 billion to $115.3 billion. As of 31 December 2025, Nigeria’s public debt stood at about $110.3 billion, or ₦159.2 trillion.

*What the Money Is For*

Tinubu told the National Assembly the $5 billion loan will be used to:

1. *Support budget implementation* and cover budget deficits

2. *Fund priority infrastructure projects*

3. *Refinance relatively expensive domestic and external debts*

4. *Meet urgent financial obligations* when necessary 67be

The President said drawing the loan in tranches will help manage pressure on the country’s debt stock and servicing obligations.

The second part of the $6 billion package is a $1 billion loan arranged by Citibank London and backed by UK Export Finance (UKEF). That money is earmarked for rehabilitation of the Lagos Port Complex and Tin Can Island Port. Tinubu said the port upgrades will address structural deficiencies, improve operational efficiency and safety standards, and boost Nigeria’s non-oil trade. The loan has a 14-year repayment tenure with 48 months’ availability period, a 1.1% availability fee and 1.07% UKEF premium.

This request has reignited debate about Nigeria’s debt profile. Think Business Africa recently argued that President Tinubu is not Nigeria’s largest borrower since 1999 based on dollar-denominated data. The group said the sharp rise in naira debt figures since 2023 reflects exchange-rate revaluation of inherited foreign-currency obligations, not just new borrowing.

However, the IMF has warned Nigeria to “tread carefully” with the proposed $5bn Total Return Swap arrangement. IMF Resident Representative Christian Ebeke said TRS structures “carry risks” and are “usually opaque” with terms that “are not always very transparent”. He flagged risks like margin calls if asset values drop or the naira depreciates. The Fund suggested Nigeria has alternatives like issuing eurobonds or raising funds on concessional terms.

The IMF also projected Nigeria’s foreign debt could hit $72.6bn by 2027.

*Reactions & Economic Implications*

Former Vice President Atiku Abubakar called the borrowing “worrisome”. Critics argue frequent borrowing despite fuel subsidy removal and higher tax revenue raises questions about fiscal sustainability.

Supporters say the loan is needed to close budget gaps and finance infrastructure without slowing growth. Tinubu has credited reforms in oil & gas for attracting “billions of dollars in fresh investment” and cited the $5 billion NLNG Train 7 project nearing completion. His administration also allocated N5.41 trillion to security in the 2026 budget and expanded education loans through the Nigerian Education Loan Fund.

Both the Senate and House of Representatives have approved Tinubu’s $6bn external borrowing request. The government can now draw the $5bn UAE facility in tranches once agreements are finalized with First Abu Dhabi Bank.

For Nigerians, the key issues will be transparency on how the tranches are spent, the actual interest/swap costs, and whether the projects funded deliver growth that outweighs the debt-service burden. With debt servicing already limiting investment in infrastructure and human development, how this $5 billion is managed will shape public trust and economic stability through 2027.