Experts Divided Over $991m UK Export Finance Deal for Nigeria’s Ports

Economists and policy analysts are sharply divided over the real benefits of the £746 million (about $991 million) export finance guarantee extended by the United Kingdom to Nigeria for the rehabilitation of key port infrastructure in Lagos.

The facility, backed by UK Export Finance (UKEF), will fund upgrades at the Lagos Port Complex in Apapa and the Tin Can Island Port in partnership with the Nigerian Ports Authority (NPA) and the Federal Ministry of Finance.

Under the agreement, at least £236 million of the financing will be channelled to British firms, with British Steel securing a £70 million contract to supply 120,000 tonnes of steel for the project.

UK Business and Trade Secretary Peter Kyle described the deal as a significant boost for UK manufacturing and bilateral relations, saying it would support jobs and economic growth in Britain.

Similarly, UKEF Chief Executive Tim Reid said the transaction highlights the agency’s role in facilitating global trade while promoting sustainable growth in partner countries.

On the Nigerian side, Minister of Marine and Blue Economy, Adegboyega Oyetola, said the port modernisation aligns with the Federal Government’s strategy to unlock the marine and blue economy sector.

He noted that improved infrastructure and automation would reduce cargo dwell time, lower logistics costs, and enhance Nigeria’s competitiveness as a regional maritime hub.

However, critics argue that the structure of the agreement suggests it primarily serves UK economic interests.

A former Head of Research at Financial Derivatives Company and founder of ACPAE Consulting, Izuchukwu Clement Igboanugo, questioned whether Nigeria was extracting optimal value from the arrangement.

“This is the reality of the UK deal that most of us have known all along; the rest of the story is noise,” he said, arguing that such agreements are often driven by the lender’s domestic economic priorities.

He contended that the UK’s engagement mirrors similar export-driven deals it has pursued with countries such as India and China, suggesting Nigeria should adopt a more strategic and assertive negotiation posture to secure balanced outcomes.

In contrast, Professor Sheriffdeen Adewale Tella of Olabisi Onabanjo University maintained that the ultimate benefits would depend largely on how the contracts are structured and implemented.

“Whether they come or we go, Nigeria has to champion the business deals,” he said.

Tella stressed the need for strong local content provisions, including technology transfer, joint ventures with Nigerian firms, and procurement frameworks that prioritise domestic suppliers. He added that capacity building, skills development, and structured training programmes must be embedded in the agreement to ensure long-term value for the economy.

The financing will be delivered through UKEF’s Buyer Credit Facility, coordinated by Citibank N.A., London Branch, marking one of the largest export credit-supported infrastructure deals in West Africa.

Analysts note that while such facilities provide access to long-term funding on relatively favourable terms, they are typically tied to procurement conditions that benefit the lending country’s industries.

The deal was signed during a high-level engagement involving UK Prime Minister Keir Starmer and Nigerian President Bola Tinubu, signalling renewed commitment to strengthening bilateral trade and investment ties. A Memorandum of Understanding is also expected to deepen collaboration in infrastructure and trade financing.

Meanwhile, the Sea Empowerment Research Center (SEREC) has warned that Nigeria’s weak and unstable foreign exchange regime could undermine the gains of the landmark port upgrade agreement.

In a statement signed by its Head of Research, Fwdr. Eugene Nweke, SEREC said that while the export credit model is widely used in global trade, it introduces significant foreign exchange exposure, limited domestic value retention, and structural fiscal risks for economies with fragile FX systems.

According to the research centre, borrowing in pounds sterling exposes Nigeria to currency mismatch risks, given that much of its earnings are dollar denominated. It cautioned that exchange rate volatility and potential naira depreciation could increase debt servicing costs over time.

SEREC recommended policy recalibration anchored on foreign exchange risk mitigation, enhanced local content integration, customs revenue optimisation, and transparent loan governance.

It also advised the introduction of currency hedging instruments for external loans, establishment of FX buffer accounts tied to project revenues, and diversification of currency exposure in sovereign borrowing.

Economic observers agree that the port rehabilitation project has the potential to significantly improve efficiency in Nigeria’s maritime sector, where congestion and delays have long constrained trade.

However, they maintain that the long-term impact will depend on disciplined execution, transparency, and Nigeria’s ability to leverage the financing arrangement for broader industrial development.

As implementation begins, attention is expected to focus not only on physical infrastructure upgrades, but also on whether the deal delivers sustainable economic value and strengthens Nigeria’s fiscal resilience in an increasingly competitive global financing environment.