Uwaleke Prescribes Project-tied Sukuk to Build Public Trust in Government Borrowing
*Says Nigeria faces substantial future Eurobond repayment obligations Ndubuisi Francis in Abuja Amid the ongoing controversy over the federal government’s proposed $20.52 billion and €1.045 billion external borrowing, renowned professor
Nigeria faces considerable future loan repayments, said Professor Uche Uwaleke, a renowned capital market expert from Nasarawa State University. Amid controversy over the federal government's $20.52 billion and €1.045 billion borrowing proposal, Uwaleke advocates exploring Sukuk financing for infrastructure projects. Sukuk, he explained, could bolster transparency and accountability in government borrowing.
The professor highlighted that public skepticism towards borrowing arises from a lack of visibility into how funds are utilized and the tangible outcomes they generate. Nigeria's total public debt reached ₦166.79 trillion as of June 30, 2026, up from ₦11.24 trillion in December 2014. While debt-to-GDP ratio may appear manageable, the pressing concern lies in the country's ability to generate revenue to service its debt.
Debt service has consumed over 70% of government revenue, leaving less fiscal space for essential services. Additionally, only 1.37% of Nigeria's debt portfolio consists of Sukuk, compared to 74.53% in discretionary FGN Bonds. Uwaleke emphasized the need to balance the debt portfolio with Sukuk financing that clearly links borrowed funds to specific development projects.
The external debt portfolio, dominated by Eurobonds, also raises questions about the efficiency and transparency of government borrowing.
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