Federal Government Allocates $747 Million for Lagos-Calabar Coastal Highway Project
The federal government has allocated a total of $747 million for the Lagos-Calabar Coastal Highway project, which is part of a broader external borrowing plan approved by the House of Representatives. This allocation includes an additional $47 million in external loans, as part of the 2025-2026 external borrowing request that was recently approved.
President Bola Ahmed Tinubu explained that the increase in funding was due to a rise in the project’s cost, which had previously been estimated at $700 million. The adjustment was made following rigorous economic evaluations, ensuring that the project aligns with national development goals such as job creation, skill development, and poverty reduction.
Despite the approval, there are growing concerns among Nigerians about the progress of the project, which was launched in March 2024. While President Tinubu inaugurated a 30-kilometer section of the highway on June 1, 2025, some critics, including blogger Anthony Abakporo, have questioned whether the completed section actually meets the claimed length.
The Lagos-Calabar Coastal Highway, managed by Hitech Construction Company Ltd, is expected to span 700 kilometers and take eight years to complete. The project aims to improve connectivity along Nigeria’s southern coast, boosting trade and economic activity.
Broader External Borrowing Plan Approved
In addition to the $47 million loan for the coastal highway, the House of Representatives also approved a larger facility under the 2025-2026 External Borrowing (Rolling) Plan. This includes USD21,890,647,912, GBP2,193,856,324.54, JPY15,000,000,000, and a grant of GBP65,000,000.
Among the key projects funded by this plan is the Nigeria Universal Communications Access Project, which will receive $300 million. This initiative focuses on bridging the digital divide by deploying 7,000 telecommunications towers across underserved communities.
The chairman of the House Committee on Aids, Loans and Debt Management, Abubakar Hassan Nalaraba, highlighted that the omission of certain critical projects in earlier borrowing plans could have harmed public interest. He clarified that the new loans do not equate to new borrowing for the 2025 fiscal year, as they were already included in the Medium-Term Expenditure Framework (MTEF).
Nalaraba emphasized that the loans would be sourced from development partners offering concessional financing, including low interest rates and long repayment periods. These funds are intended to support infrastructure development, education, healthcare, and other priority sectors.
Key Projects Funded by the Loans
Several major projects are set to benefit from the newly approved loans. These include:
- Hope Health Education and Governance – $1.5 billion
- Construction of Fibre Optics Network – $980 million
- Sustainable Power and Irrigation for Nigeria – $500 million
- Rural Access and Agricultural Market Project Scale Up – $500 million
These initiatives are expected to create millions of jobs, reduce food inflation, and boost export earnings. Additionally, the grant component of GBP65 million does not require repayment, offering a unique opportunity for climate resilience and gender empowerment.
Debt Sustainability and Economic Impact
Despite the increased borrowing, the federal government maintains that its debt portfolio remains sustainable. With a debt-to-GDP ratio of around 50%, well within the international threshold of 56%, the administration claims it has successfully reduced the debt service to revenue ratio from over 90% to less than 70%.
The Nigerian Tax Act 2025 is projected to drive a year-on-year revenue growth of over 18% starting from 2026, further strengthening the government’s ability to manage new debt obligations. The proposed loans are spread across multiple concessional sources, ensuring minimal impact on short-term debt servicing while supporting long-term investment in critical sectors.
Regional Benefits and Infrastructure Focus
Several states, including Abia, Bauchi, Borno, Gombe, Kaduna, Katsina, Lagos, Niger, Oyo, Sokoto, Yobe, and Zamfara, will benefit from concessional loans for various infrastructural projects. These include road construction, clean energy, waterways, and human capital development in education and healthcare.
Expert Views on Borrowing Practices
Prof. Ken Ife, Chief Economic Strategist for ECOWAS, emphasized that borrowing must be directed toward infrastructure rather than consumption. He warned that past practices of opaque and unaccountable borrowing have led to fiscal stress. According to the Fiscal Responsibility Act, borrowing should be reserved for capital expenditures such as healthcare and infrastructure, with clear economic value through mechanisms like Public-Private Partnerships.
He noted that loans must come with concessional rates and long tenors, typically between 10 to 20 years. Until borrowing is transparent and focused on productive investments, he argued, Nigeria risks deepening its fiscal vulnerabilities.
Historical Context and Future Outlook
The recent approval follows a pattern of expanding borrowing under President Tinubu’s administration. Earlier in 2025, the Senate approved a $21 billion foreign borrowing plan to address budget shortfalls. In 2023, the president sought approval for a $7.8 billion and GBP100 million borrowing plan for infrastructure and social development.
With Nigeria’s total public debt reaching N149.39 trillion as of March 31, 2025, concerns about sustainability persist. However, the government continues to argue that concessional loans are essential for closing the infrastructure gap and driving economic growth.
