President Bola Tinubu’s state visit to the United Kingdom has delivered a headline-grabbing £746 million (N1.36 trillion) financing agreement to modernise the Apapa and Tin Can Island ports in Lagos.
On the surface, the agreement appears to be long-overdue progress. Nigeria’s primary maritime gateways, which have been degraded over decades of neglect, urgently require rehabilitation.
But beneath the optimism lies a more complicated and troubling reality about debt, industrial policy, and missed opportunities.
The government’s position, as articulated by the Marine and Blue Economy Minister, Adegboyega Oyetola, is tenable.
Modern infrastructure, digitalisation, and expanded capacity will reduce vessel turnaround times, cut cargo dwell periods, lower logistics costs, and ultimately boost revenue.
These are not inconsequential gains. Nigeria’s ports are notoriously inefficient, with turnaround times far worse than regional competitors like Cotonou, Lomé and Tema to which Nigerian importers divert goods to avoid higher costs and stress. So, fixing this bottleneck could unlock significant economic value.
Yet the critical question is not whether the ports should be upgraded, but how.
The £746 million Buyer Credit Facility, backed by UK Export Finance, coordinated and arranged by Citibank, is not a neutral financing instrument. It is tied funding, requiring Nigeria to spend at least £236 million on British goods and services.
In effect, Nigeria is borrowing to stimulate another country’s industrial base. This is made stark by the “record” £70 million contract to supply 120,000 tonnes of steel awarded to British Steel, a struggling firm owned by China’s Jingye Group and supported by UK industrial policy to preserve 4,000 jobs at its plant in Scunthorpe.
The optics are difficult to ignore. Nigeria, a country with over 3 billion metric tonnes of iron ore deposits and a moribund steel sector exemplified by the dormant Ajaokuta Steel Company, is effectively borrowing money to import steel to rebuild its own infrastructure, while its domestic capacity, at 2 million MT per annum, remains terribly inadequate, accounting for only 28 per cent of consumption.
This is both an economic contradiction and a strategic failure. Industrialisation cannot occur if core inputs like steel are perpetually outsourced.
The financing model raises deeper concerns about Nigeria’s rising debt profile. Even if the terms of the loan remain undisclosed, the structure is familiar: export credit financing that benefits the lender’s economy while adding to the borrower’s liabilities.
At a time when debt servicing has consumed N27.5 trillion in the last two years, it is set to swallow half of this year’s revenues, and with the national debt standing at N153.9 trillion as of September 2025, such arrangements demand far greater scrutiny than they appear to be receiving.
Nigeria itself has already tested an alternative path. The $1.5 billion Lekki Deep Sea Port, with a 1.2 million TEU capacity, offers a solid example of how large-scale port infrastructure can be delivered through private capital under a concession model.
Built under a public-private partnership, Lekki was financed largely by foreign investors who now operate it under a long-term BOT agreement.
While not without its own risks, particularly regarding foreign control, it demonstrates that Nigeria does not necessarily need to borrow sovereign funds to build commercially viable port infrastructure.
Dubai Ports has a 50-year agreement to operate the port in Delaware, United States. The UK, the Netherlands, India, Brazil and Ghana have all attracted private capital to port operations.
Indeed, Apapa and Tin Can are proven cash-generating assets, handling over 70 per cent of Nigeria’s trade.
Both ports generated over N1 trillion in Q1 2025. Apapa alone generated N2.4 trillion in the first 10 months of 2025, setting a record of N304 billion in October.
Their revenue streams make them ideal candidates for concession or direct investment models, in which private operators, which already exist at both ports, finance upgrades in exchange for operational rights, under revised terms, to recover their investments. Such arrangements would reduce pressure on public debt while leveraging the efficiency and capital of private players.
Instead, the current deal doubles down on a model that entertains debt risk and externalises benefits.
Compounding these concerns is the structure of project execution. The prominent roles of ITB Nigeria and Hitech, both linked to the same business interests, raise legitimate questions about concentration risk and transparency.
When major national infrastructure projects are repeatedly awarded to a narrow circle of contractors, it undermines competition and heightens the risk of inefficiency and cost inflation.
Even if the financing and execution issues were resolved, a more fundamental challenge remains: infrastructure does not exist in isolation.
Nigeria’s ports have long suffered not only from outdated quays and equipment, but from dysfunctional access roads, limited rail connectivity, and deeply entrenched inefficiencies in customs processes.
Without fixing these, modernised ports may simply become more efficient bottlenecks.
The experience of Apapa itself is instructive. Billions have been spent over the years on partial upgrades, yet the notorious gridlock persists, driven by poor logistics planning and weak enforcement.
If trucks still spend days accessing the ports, and cargo clearance remains bogged down by bureaucracy and corruption, the gains from physical upgrades will be marginal.
Perhaps the most glaring omission in the current strategy is the continued overconcentration of maritime activity in Lagos.
Developing the eastern ports—Onne, Warri, Calabar, and Port Harcourt— is essential. Over 70 per cent of Nigeria’s cargo flows through Lagos, creating chronic congestion, inflating costs, and distorting regional economic development. It also constitutes a significant national security risk in the case of hostile foreign activity.
A more balanced port system would reduce pressure on Lagos, cut transportation costs for businesses in the South-East and South-South, and improve national logistics resilience. It would also curb the diversion of cargo to neighbouring countries, which remains a significant drain on Nigeria’s customs revenues.
In this context, pouring borrowed funds into Lagos ports alone appears strategically narrow.
None of this is to suggest that the UK deal has no merit. The need for port modernisation is urgent, and the potential efficiency gains are real. But the broader framework within which this deal sits is highly defective.
Nigeria is borrowing to rebuild critical infrastructure, yet tying that borrowing to foreign industrial benefits, sidelining domestic capacity, and neglecting more sustainable financing alternatives.
This is not just about ports. It is about the kind of economy Nigeria is choosing to build or failing to build.
If the country continues to rely on debt-funded, import-dependent infrastructure development, it risks entrenching a cycle of dependency.
But if it embraces more strategic financing models, invests in domestic industry, and adopts a genuinely national approach to port development, it could turn its maritime sector into a true engine of growth.
For now, the £746 million deal stands as an opportunity, but the government must be wary of its many pitfalls.
