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World Bank Lists Nigeria The Fifth High Debt Risk Exposure Countries

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The World Bank has stated that Nigeria is among a list of top 10 countries with high debt risk exposure.

It stated this in the financial statement for International Development Association, which was among the World Bank FY21 audited financial statements released on Monday.

The financial statement said, “IDA faces two types of credit risk: country credit risk and counterparty credit risk.

“Country credit risk is the risk of loss due to a country not meeting its contractual obligations; and counterparty credit risk is the risk of loss attributable to a counterparty not honoring its contractual obligations.

“IDA is exposed to commercial as well as noncommercial counterparty credit risk.”

It stated, “As of June 30, 2021, the 10 countries with the highest exposures accounted for 66 percent of IDA’s total exposure.”

Nigeria was rated fifth on the list with $11.7bn IDA debt stock, while India led the list with $22bn IDA debt stock, followed by Bangladesh with $18.1bn IDA debt stock, Pakistan with $16.4bn IDA debt stock, and Vietnam with $14.1bn IDA debt stock.

Other countries on the list in order of appearance included Ethiopia with $11.2bn IDA debt stock, Kenya with $10.2 billion IDA debt stock, Tanzania with $8.3 billion IDA debt stock, Ghana with $5.6 billion IDA debt stock, and Uganda with $4.4 billion IDA debt stock.

It added that there was a Single Borrower Limit for IDA, which for FY22, had been set at $45bn (25 percent of $180.9 billion of equity as of June 30, 2021).

It was further discovered that Nigeria’s undisbursed balance with the World Bank is about $8.656 billion as at June 30, 2021.

According to the financial statement for the International Bank for Reconstruction and Development, Nigeria has a total of $589 million undisbursed balance, consisting of $500m loans approved but not yet signed and $89 million signed loan commitment.

The financial statement for IDA disclosed that Nigeria had a total undisbursed balance of $8.07 billion, consisting of $1.462 billion loans approved but not yet signed and a $6.61 billion signed loan commitment.

The financial statement for IBRD disclosed that although certain amount of loans has been agreed ‘the loans are not effective and disbursements do not start until the borrowers and/or guarantors take certain actions and furnish documents’.

A total of $1 billion loans were agreed between Nigeria and the World bank’s IBRD, of which Nigeria’s outstanding loan is $411 million.

For IDA, a total of $19.54 billion loans were agreed upon, of which Nigeria’s outstanding loan is $11.47 billion.

According to the Debt Management Office, Nigeria owes the World Bank a total of $11.51 billion, consisting of $11.10 billion IDA loans and $410.23 million IBRD loans as of March 31.

Other financial statements released included the statements for International Finance Corporation and Multilateral Investment Guarantee Agency.

In a press statement titled ‘World Bank Group Releases FY21 Audited Financial Statements’, the bank disclosed that the World Bank Group commitments rose to $84.3 billion in the fiscal year 2021, 15 percent higher than FY20.

The statement quoted the World Bank Group President, David Malpass, as saying, “The World Bank Group support to client countries surged to $157 billion over the last 15 months to address increased poverty, inequality, and the impacts of COVID-19.”

He added that the unprecedented level of commitments helped countries strengthen health systems, protect the poor and vulnerable, support jobs and businesses, promote economic growth, and lay the foundation for green, resilient and inclusive recovery.

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Finance

Federal Government Clears $120m Debt to Gas Companies Amid Nigeria’s Power Crisis

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Gas-Pipeline

Amidst Nigeria’s persistent power crisis, the Federal Government has taken a pivotal step forward by clearing a significant portion of its debt to gas companies.

A sum of $120 million has been paid out of the country’s $1.3 billion indebtedness to gas suppliers, offering a glimmer of hope for improved energy stability across the nation.

The Minister of Power, Chief Adebayo Adelabu, underscored the critical role of gas in power generation and highlighted how the mounting debts had severely hampered gas supply to electricity-generating companies, exacerbating the country’s electricity shortfall.

Nigeria heavily relies on thermal power plants fueled by gas for over 70% of its electricity needs, making the timely settlement of gas debts paramount for enhancing power generation capacity and addressing the nation’s energy deficit.

Addressing delegates at the 7th Nigeria International Energy Summit in Abuja, the Director of the Decade of Gas Secretariat, Ed Ubong, expressed optimism about the government’s progress in offsetting its financial obligations to gas producers.

He emphasized the importance of aligning gas and power sectors to foster sustainable energy solutions.

As Nigeria grapples with the multifaceted challenges plaguing its energy landscape, the government’s commitment to settling outstanding gas debts marks a pivotal stride towards revitalizing the country’s power infrastructure and ensuring reliable electricity access for its citizens.

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Finance

Nigeria Insurance Corporation Reimburses Depositors of 179 Closed Microfinance and Four Mortgage Banks

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Retail banking

The Nigeria Insurance Corporation (NDIC) has announced the successful reimbursement of depositors affected by the closure of 179 microfinance banks and four mortgage banks across the country.

The reassuring news came during the 45th Kaduna International Trade Fair, where NDIC’s Managing Director, Dr. Bello Hassan, explained the corporation’s unwavering commitment to safeguarding depositors’ funds amidst financial uncertainties.

Dr. Hassan, represented by Hauwa Gambo, the NDIC’s Deputy Director of Communication, highlighted the corporation’s proactive measures in protecting the interests of depositors.

The introduction of the Single Customer View framework has expedited the process of reimbursing depositors of liquidated banks, ensuring swift and transparent transactions.

The corporation’s collaboration with the judiciary has yielded positive results, facilitating the speedy prosecution of failed insured banks and resolving long-standing cases of bank liquidations like Fortune and Triumph Banks.

This concerted effort has significantly enhanced the debt recovery rate, enabling NDIC to declare full liquidation dividends to uninsured depositors of over 20 deposit money banks.

Furthermore, NDIC has embraced digital remote payment strategies, streamlining electronic funds transfers to verified depositors’ alternate bank accounts.

The introduction of the ‘Deposit Tracer’ initiative in partnership with mobile operators aims to address apathy among depositors with small balances, providing accessible avenues for claiming funds trapped in closed banks.

The initiatives underscore NDIC’s proactive stance in safeguarding depositors’ interests and ensuring financial stability in Nigeria’s banking sector.

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Banking Sector

85.51 Million Nigerian Bank Customers Face Withdrawal Freeze Over NIN, BVN Deadline

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First Bank

As the March 1 deadline looms, an estimated 85.51 million Nigerian bank customers are facing the possibility of frozen accounts due to their failure to link their National Identification Numbers (NINs) and/or Bank Verification Numbers (BVNs) to their accounts.

Recent findings reveal the potential scale of the impending banking crisis.

Data from the Nigeria Inter-Bank Settlement System (NIBSS) indicates that Nigeria had approximately 146 million active individual bank customers as of December 2022.

However, by January 26, 2024, only 60.49 million BVNs were recorded on the NIBSS portal, leaving a significant portion unlinked.

Meanwhile, about 104 million NINs had been issued by December 2023, highlighting the disparity between NIN issuance and BVN linkage.

The Central Bank of Nigeria (CBN) had earlier issued directives to banks, mandating them to restrict transactions on accounts lacking linked NINs and BVNs, with effect from March 1, 2024.

Any accounts found non-compliant risk being designated as ‘Post no Debit,’ rendering them unable to process further transactions.

Responding to the impending crisis, the Director-General of the National Identification Management Commission (NIMC), Abisoye Coker-Odusote, emphasized the need for the revalidation of Front-End Partners (FEPs) to ensure the integrity of the identity database.

She underscored the importance of NIN registration and urged collaboration with various stakeholders to expedite the process.

The Executive Vice Chairman/CEO of the Nigerian Communications Commission (NCC), Dr. Aminu Maida, reiterated the significance of linking NINs to SIM cards to enhance national security.

Telecom subscribers were urged to comply with the NIN-SIM linkage directive to avoid service disruptions.

Meanwhile, financial service providers like Opay have issued reminders of the impending restrictions, urging customers to comply with the linkage requirements.

Amidst concerns, some customers contemplate transferring funds to compliant accounts to avoid potential financial setbacks.

As the deadline approaches, stakeholders are intensifying efforts to mitigate the impact of the impending banking crisis on millions of Nigerians.

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