* Says growing debt burden demands urgent, fundamental rethink
Ndubuisi Francis in Abuja
Renowned financial expert, Prof. Uche Uwaleke, has stated that Nigeria’s growing public debt burden has made an urgent case for a fundamental rethink of how the country finances infrastructure.
He stated that the Nigerian capital market offers viable alternatives through infrastructure bonds, infrastructure funds, infrastructure investment trusts and other structured investment vehicles that can attract institutional investors and ordinary Nigerians into commercially viable projects.
In an article, ‘Beyond Government Borrowing: How the Capital Market can Unlock Opportunities to Finance Nigeria’s Infrastructure,’ he argued that the whole idea was to move beyond a model in which government borrows and carries most of the financial risks, towards one in which government uses its institutions, assets and regulatory influence to attract private investment.
Citing statistics by the Debt Management Office (DMO), Uwaleke noted that Nigeria’s total public debt rallied to N166.79 trillion by June 30, 2026, representing an increase of N14.39 trillion, or 9.4 per cent, compared with the N152.40 trillion recorded a year earlier.
“Of this amount, domestic debt accounted for N91.59 trillion (54.91 per cent), while external debt stood at N75.20 trillion (45.09 per cent).
“The debt stock also increased by N7.44 trillion in just three months, from N159.35 trillion at the end of March 2026. The pressure is compounded by the cost of servicing these obligations: Nigeria is projected to spend about US$11.6 billion on debt service in 2026, close to half of expected government revenue,” he said.
Against this backdrop, the one-time finance commissioner in Imo State said the question was no longer how much more government can borrow, but how it can mobilise long-term domestic and international capital to finance critical infrastructure without further deepening the public debt burden.
According to him, the Nigerian capital market offers viable alternatives through infrastructure bonds, infrastructure funds, infrastructure investment trusts and other structured investment vehicles that can attract institutional investors and ordinary Nigerians into commercially viable projects.
Properly structured, he explained that these instruments can channel private savings into productive infrastructure, while ensuring that long-term project financing was supported by the revenue streams generated by the assets themselves, making such investments financially sustainable and, in the case of project-backed bonds, potentially self-liquidating rather than an additional burden on general government revenues.
“The whole idea is to move beyond a model in which government borrows and carries most of the financial risk, towards one in which government uses its institutions, assets and regulatory influence to attract private investment.
“Properly structured infrastructure bonds, for example, can provide long-term financing whose repayment is supported by the cash flows of the infrastructure project itself. Where tolls, user charges, power-purchase agreements or other predictable revenues are sufficient to meet interest and principal repayments, the borrowing can become self-liquidating rather than a continuing claim on general government revenues.
“Infrastructure funds and investment trusts can go further by allowing investors to acquire an economic interest in infrastructure assets and share in the income they generate, while diversifying risk across a portfolio of projects,” the Professor of Capital Market at the Nasarawa State University, Keffi and President of the Capital Market Academics of Nigeria (CMAN) said.
Uwaleke explained that a good example of how the government can use external financing and a relatively modest initial budget contribution to deliver major infrastructure was the Abuja-Keffi-Akwanga-Lafia-Makurdi road, adding that the project was executed by China Harbour Engineering Company under an Engineering, Procurement and Construction with Finance (EPC+F) arrangement.
He said 85 per cent ($460.8 million) of the contract sum of $542.14 million was financed through a China Exim Bank facility, while the Federal Government provided the remaining 15 per cent ($81.32 million) as counterpart funding.
“The project demonstrates the potential benefits of using structured financing to reduce the immediate call on government budgetary resources. Rather than financing the entire construction cost from public funds, government contributed a fraction of the initial financing requirement and obtained a major transport asset.
“The broader lesson is that infrastructure should be structured around identifiable revenue streams and repayment capacity. This is where the Nigerian capital market can play a much more significant role,” he stressed, adding that infrastructure bonds could be issued to finance projects with predictable cash flows, while infrastructure funds can pool capital from several investors and allocate it across different projects.
“Infrastructure investment trusts offer another opportunity by enabling investors to acquire units in a professionally managed vehicle that holds income-generating assets such as toll roads, power transmission facilities, ports and other infrastructure. Instead of government carrying the entire cost of building and maintaining these assets, private investors can provide capital in exchange for a share of the income generated.
“International experience shows how a sovereign investment institution can help make this model work. India provides a particularly instructive example through its National Investment and Infrastructure Fund (NIIF), a sovereign-anchored investment platform established to mobilize domestic and international capital for infrastructure and other nationally important sectors,” he said.
Citing several models and examples from India, he noted that the examples were particularly relevant because Nigeria already has an institution with a mandate to perform a similar catalytic role–the Nigeria Sovereign Investment Authority (NSIA), which was established to manage public investment funds and support long-term economic development, including the development of domestic infrastructure.
“Its three core funds include the Stabilization Fund, the Future Generations Fund and the Nigeria Infrastructure Fund (NIF), with the latter specifically mandated to invest in Nigerian infrastructure.
“The NIF’s stated investment sectors include motorways, healthcare, power and agriculture, among others. More importantly, its investment strategy already provides for direct investment in infrastructure projects and companies, co-investment through investment funds, and the creation of institutions that support infrastructure development.
“This means Nigeria does not necessarily need to establish another government-owned infrastructure fund. A more practical approach would be to strengthen the existing Nigeria Infrastructure Fund and position the NSIA as a major anchor investor, sponsor and catalyst for infrastructure investment vehicles that can raise additional capital from the market.
“The NSIA could commit a portion of its infrastructure allocation as seed capital to a regulated infrastructure fund or investment trust, while inviting pension fund administrators, insurance companies, banks, asset managers, international development finance institutions and other long-term investors to participate.
“Once the vehicle has an appropriate governance structure, a credible pipeline of projects and a clear investment mandate, it could raise additional capital through private placements or public offerings on the Nigerian Exchange, subject to the relevant regulatory requirements.There is also a compelling opportunity to bring ordinary Nigerians into this process,” Uwaleke noted.