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Rising Borrowing Amid Weak Revenue Generation Pushes Nigeria’s Debt Stock to N31trn in H1 2020

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Nigeria’s Total Debt Stock Rises to N31 Trillion in H1 2020

The Debt Management Office (DMO) has said Nigeria’s total debt stock stood at N31.009 trillion (US$85.897bn) as of June 30, 2020.

In the press release titled, “DMO Releases June 30, 2020 Public Debt Data”, the debt office said the stated amount comprises the debt stock of the federal government, the 36 state governments and the federal capital territory.

It also noted that the debt rose from N28.628 trillion (US$79.303bn) on March 31 to N31.009 trillion on June 30, 2020.

The increase was attributed to the recent procured US$3.4 billion budget support loan from the International Monetary Fund, new domestic borrowing to finance the revised 2020 appropriation act including the issuance of the N162.557 Billion Sukuk, and promissory notes issued to settle claims of exporters.

Nigeria had to approach multilateral financial institutions for loans following a plunge in the nation’s revenue generation and oil price due to the global pandemic. Both the Central Bank of Nigeria and the Federal Government had adjusted the Naira forex rate from N306/US$ to N379/US$ to protect the nation’s dwindling foreign reserves and instituted other measures to contain the ongoing broad-based decline across the board.

However, despite the measures, the economy contracted by 6.10 percent in the second quarter of 2020 with the inflation rate rising to 12.82 percent while the unemployment rate rose to 27.1 percent or 21.8 million people in the same quarter.

As the nation struggles to curb further economic decline, the DMO said the debt will rise with an increase in new borrowing and expected disbursements from the World Bank and other financial institutions.

It said, “The DMO expects the Public Debt Stock to grow as the balance of the New Domestic Borrowing is raised and expected disbursements are made by the World Bank, African Development Bank and the Islamic Development Bank which were arranged to finance the 2020 Budget.”

“It will be recalled that the 2020 Appropriation Act had to be revised in the face of the adverse and severe impact of COVID-19 on Government’s Revenues and increased expenditure needs on health and economic stimulus amongst others. Additional Promissory Notes are expected to be issued in the course of the year, this, and new borrowings by State Governments are also expected to increase the Public Debt Stock.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

Stanbic IBTC Obtains Approvals, License to Establish Life Insurance Subsidiary

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stanbic IBTC Insurance

Stanbic IBTC Holdings Plc on Friday announced that it has obtained all required Regulatory Approvals and a license from the National Insurance Commission to establish a wholly-owned Life Insurance subsidiary, Stanbic IBTC Insurance Limited (SIIL).

In a statement signed by Chidi Okezi, Company Secretary, Stanbic IBTC and released on Friday, the bank said “The establishment of this new subsidiary essentially complements the bouquet of product offerings by Stanbic IBTC as it continues its goal of being the leading end-to-end financial solutions provider in Nigeria. In this regard, SIIL will aim to facilitate long term insurance for already financially included individuals and will seek to become the preferred Insurer in the Life Insurance Business.

“Stanbic IBTC Holdings PLC, a member of Standard Bank Group, is a full-service financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management. The group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20.1% shareholding. In addition, Standard Bank Group and ICBC share a strategic partnership that facilitates trade deals between Africa, China and select emerging markets. Standard Bank Group is the largest African financial institution by assets. It is rooted in Africa with strategic representation in 21 countries on the African continent.

“Standard Bank has been in operation for over 158 years and is focused on building first-class, on-the-ground financial services institutions in chosen countries in Africa; and connecting selected emerging markets to Africa by applying sector expertise, particularly in natural resources, power and infrastructure.”

 

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World Bank to Discuss New $1.5 Billion Loan Request From Nigeria

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Zainab Ahmed

The Finance Minister, Budget and National Planning, Mrs. Zainab Ahmed, on Friday said the Federal Government has met all the conditions for a fresh loan of $1.5 billion from the World Bank.

The minister disclosed this on Bloomberg TV.

She said the multilateral financial institution is in the final stage of approving the loan. The minister explained that the loan will be discussed in the bank’s next meeting and possibly be approved in the same meeting.

In June, the Senate approved the borrowing plans but the World Bank pushed back demanding Nigeria fulfill the conditions attached to the $3.4 billion loan received from the International Monetary Fund (IMF) in May.

Some of the conditions were to increase revenue generation by upping VAT, the introduction of tariff reflective electricity bill, the removal of subsidy and the unification of the nation’s foreign exchange.

Most of which the Federal Government has done despite protests from most Nigerians who called the new policies anti-people given their current situation.

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Nigeria Realises Over N400 Billion from Company Income Tax in the Third Quarter of 2020

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The Federal Government realised N416.01 billion from Company Income Tax (CIT) in the third quarter of the year, according to the latest report from the National Bureau of Statistics (NBS).

This was 3.48 percent higher than the N402.03 billion generated in the second quarter of the year and represents a decline of 20.13 percent year-on-year from N520.89 billion realised in the third quarter of 2019.

A breakdown of the report showed the professional services sector including the telecoms generated the highest amount of CIT at N55.52 billion during the quarter, while the manufacturing sector followed with N42.03 billion.

The banking and financial institutions realised N24.05 billion while the mining generated the least and closely followed by Textile and Garment Industry and Local Government Councils with N120.93 million, N167.51 million and N321.72 million generated, respectively.

The report added that out of the total amount realised during the quarter under review, a sum of N244.70 billion was generated as CIT locally. The federal government collected N70.34 billion as foreign CIT payment and the remain N100.97 billion was received as CIT from other payments.

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