At the international wing of the Murtala Muhammed Airport in Lagos, construction is still underway to expand Nigeria’s busiest airport.

That’s part of a bigger push to upgrade infrastructure across the country. economy. But that push is becoming expensive. As Africa’s most populous economy works to modernize infrastructure and attract long-term investment, it is also dealing with inflation, high borrowing costs and growing demands in public revenue..

That tension is the focus this week’s 234Digest.

Last week, President Bola Tinubu’s warned that Nigeria could spend nearly half of projected revenue on debt payments this year. That will likely cut into infrastructure funding, and how capital is allocated.

That said, investors continue to look for long-term opportunities.

Hospitality firm Accor is backing a new hotel platform in Nigeria, while pension funds are being mobilized to support the planned Dangote Refinery IPO. Meanwhile, S&P Global Ratings upgraded Nigeria’s sovereign rating for the first time since 2012, citing improved refining capacity and foreign exchange reforms.

The signals point to a country still pushing toward expansion, albeit under tighter financial conditions. We break it down in our lead signal.

Nigeria will spend about $11.6 billion servicing debt in 2026. That’s nearly half of expected government revenue, President Bola Tinubu said at the Africa Forward Summit in Nairobi.

Tinubu warned that borrowing costs are increasingly shaping the country’s path to growth and development. He said rising debt-service obligations are taking money away from infrastructure, industrial expansion, healthcare and skills development at a time when Nigeria wants to speed up long-term growth.

“Every single dollar that leaves our treasury to pay punitive interest rates is a dollar that did not go into our steel sector, textile mills, agro-processing plants or digital industries,” he said.

Tinubu’s warning reflects a wider problem for developing economies.

UNCTAD reports rising borrowing costs are squeezing public spending in three out of four developing countries, with more government revenues going to debt servicing and leaving less for infrastructure and industry.

The Organisaton of Economic Co-operation and Development (OECD) adds that governments and companies borrowed about $27 trillion from debt markets in 2025, with that figure projected to rise further in 2026.

According to the Director for Financial and Enterprise Affairs at the OECD, Carmine Di Noia, much of that money is flowing to advanced economies and tech sectors, especially artificial intelligence infrastructure.

This is widening the gap between rich countries that can borrow cheaply for innovation and developing countries that struggle to fund basics like power and transport.

In the case of Nigeria, that contrast helps explain the growing importance of large-scale private industrial investment at a time when public finances remain under pressure.

S&P Global Ratings upgraded Nigeria’’s credit rating by one notch to B. It also changed the outlook to stable. This is the first upgrade since 2012.

The agency said higher oil prices, more local refining and Nigeria’s decision to let the naira float freely helped drive the upgrade.

The upgrade gives external support for reforms in the past two years. These include efforts to stabilize the naira, improve dollar liquidity and cut reliance on imported fuel.

S&P also noted Nigeria’s growing ability to refine and export fuel locally afer the Dangote Refinery started operations.

Nigeria is still below the investment grade. But if reforms, the upgrade is expected to boost investor confidence and slightly lower borrowing costs

Nigeria’s pension regulator will let pension funds invest in the Dangote Petroleum Refinery IPO after it have fund managers a special waiver.

Normally, pension funds can only invest in companies with a strong profit and dividend history. Dangote Refinery, which began operations in 2024, does not meet that rule yet. The waiver suspends for this IPO only.

The listing is expected to be one of the biggest in Nigeria’s capital market history.

As the door opens for pension to participate, the government is using retirement savings to back strategic assets.

Accor signed a letter of intent with Nigerian investment group Shoreline Group at the Forward Africa summit in Nairobi.

The French hospitality group, which owns and franchises hotels and resorts worldwide, will partner with Shoreline to build what the companies describe as Nigeria’s first national hotel platform.

The initiative aims to develop ten hotels across eight Nigerian cities by 2030, backed by a planned $300 million investment.

The project spans midscale to luxury hospitality and includes a hospitality training academy to support workforce skills and service standards.

The deal shows international firms still see long-term opportunity in Africa’s largest consumer market despite macroeconomic pressures,.

Nigeria’s inflation rate climbed to 15.7% in April, the highest level in five months, according to latest day for from the National Bureau of Statistics, adding fresh pressure on policymakers attempting to stabilize the economy.

The increase was driven partly by rising energy costs linked to geopolitical tensions surrounding the Iran conflict.

234Digest tracks the capital, infrastructure and industrial signals shaping Nigeria’s economic story.

If this was forwarded to you, you can sign-up to receive the weekly briefing.