Nigeria is increasingly rethinking its external borrowing strategy, even as it continues to enjoy strong appetite from global investors in the Eurobond market. Over the past two years, the country has raised more than $4.5 billion internationally, reflecting continued confidence in Africa’s largest economy despite concerns over rising debt and currency instability.
In late 2024 and again in 2025, Nigeria successfully tapped the Eurobond market, raising $2.2 billion and $2.35 billion respectively. Demand was overwhelming, with orders hitting $9 billion and $13 billion, marking the strongest subscription levels in the country’s Eurobond history. However, instead of immediately returning to the market, the government is now exploring a proposed $5 billion financing deal with First Abu Dhabi Bank.
The shift has sparked debate among economists and market watchers over whether Nigeria is moving away from Eurobonds or simply diversifying its funding sources. Financial analyst Titilayo Daramola suggests the move is less about rejection of Eurobonds and more about timing and flexibility, noting that the country recently accessed the market and may be avoiding overexposure.
Supporters of bilateral financing argue that such arrangements can be faster and more flexible than traditional bond issuances. Unlike Eurobonds, which require extensive investor engagement and market pricing, bilateral deals are negotiated directly with lenders. Some financial experts also believe these structures can reduce costs and offer more tailored repayment conditions if properly designed.
However, concerns remain over transparency and long-term risk. The International Monetary Fund has reportedly cautioned Nigeria on the proposed arrangement, while some economists warn that the complexity of such deals could obscure repayment risks, especially under currency pressure or economic downturns. Others stress that the real issue is not the source of borrowing but how effectively the funds are used to generate economic growth.
Economist Faith Iyoha of the Nigerian Economic Summit Group argues that debt sustainability depends on structure and productivity rather than lender type. She emphasizes that borrowing only becomes beneficial when funds are invested in infrastructure, exports, and human capital—projects capable of generating jobs, revenue, and foreign exchange. Without that, she warns, even the best financing arrangement can become a burden on the economy.
source: Business day