A Fellow of the Institute of Credit Administration, Asiwaju Busari Shaamsuddeen Akande, has advised President Bola Tinubu against excessive reliance on borrowing to finance infrastructure projects.
He urged the Federal Government to adopt asset-backed financing and public-private partnerships.
Akande said Nigeria's ambition of building a $1 trillion economy by 2030 could be undermined if the government continued accumulating debts without ensuring that infrastructure investments generated sufficient economic returns.
His warning comes amid Tinubu's renewed moves to secure additional external loans to finance government projects.
In an assessment of the country's economic direction, the expert said the government must look beyond the volume of infrastructure being constructed and determine how quickly such investments could translate into industrial output, increased business activities and government revenue.
He noted that borrowing heavily for projects with long gestation periods could create a mismatch between immediate debt-servicing obligations and the time required for the investments to generate returns.
Akande argued that "Nigeria should reduce its dependence on conventional borrowing by exploring Public-Private Partnerships and sovereign Sukuk financing".
According to him, these funding arrangements would allow private investors to participate in infrastructure development while sharing the associated commercial risks.
He also warned that high government borrowing costs could discourage commercial banks from lending to businesses, as financial institutions might prefer investing in government securities offering attractive returns.
The financial expert further argued that infrastructure projects must be linked to industrial and agricultural production centres to ensure that local businesses, particularly small and medium-scale enterprises, benefit from the investments.
He said the government should establish mechanisms for directing part of the revenue generated by infrastructure projects towards reducing public debt.
Akande, a Certified Islamic Finance Executive, maintained that the success of the $1 trillion economic target would depend not merely on the scale of government spending "but on the productivity of investments, equitable access to economic opportunities and effective management of public debt."
Expert cautions Tinubu against debt trap, seeks asset-backed infrastructure funding