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Spotlight on Nigeria’s Public Debt Stock – Coronation Merchant Bank



Muhammadu Buhari

According to Nigeria’s Debt Management Office (DMO), Nigeria’s total public debt rose by 4.1% or N1.5trn from N38trn at end-September ‘21 to N39.5trn at end-December 2021. The total public debt increased by 20.2% or N6.6trn when compared to the corresponding period in 2020. As at end-2021, public debt is equivalent to 22.5% of 2021 nominal GDP.

This is in line with the DMO’s debt management target of a debt-to-GDP ratio of 40% of GDP for the period 2020-2023 and below the limit of 55% set by the World Bank for countries within Nigeria’s peer group. It is also below the 70% set by the Economic Community of West African States. According to the DMO, disbursements by multilateral
and bilateral creditors account for a significant portion of the increase in the debt stock.

Total domestic debt increased by 17.3% y/y from N20.2trn in 2020 to N23.7trn at end2021. This constitutes 59.9% of total public debt. On a q/q basis, it increased by 5.7%, on the back of increased issuances of FGN bond and Nigerian treasury bills (NTBs) in Q4 ’21.

In terms of composition, FGN domestic debt constitutes 81.2% of total domestic debt, while states and FCT make up the remaining 18.8%. Bonds and NTBs make up 92.2% of total FGN domestic debt while FGN sukuk, treasury bond, savings bond, green bond, and promissory notes make up the remaining 7.8%.

The share of states and the FCT’s domestic debt increased by 6.2% q/q to N4.5trn from N4.2trn at end-September ‘21. On a y/y basis, it increased by 6.5%. The most indebted states were Lagos (N658bn), Ogun (N232bn) and Rivers (N225bn).

Coronation Merchant Bank notes that with the securitisation of the ways and means advances from the CBN and the addition of AMCON debt, the domestic debt stock is likely to increase. As at end-2021, the stock of CBN’s ways and means advances stood at N13.3trn.

External debt stock stood at USD38.3bn (N15.8trn) at end-2021. This points towards increases of 1.8% q/q and 24.7% y/y. The rise was largely due to the USD4bn Eurobonds issued by the FGN in September ’21, as part of new external borrowing in the 2021 appropriation act.

The external debt stock accounts for 40.1% of total public debt. Multilateral and bilateral loans account for the bulk of the external debt at 60.2%, while commercial loans and promissory notes represent the remaining 39.8%.
Insufficient revenue continues to hamper Nigeria’s fiscal landscape, resulting in one of the highest debt-service-to-revenue ratio among African economies.

Nigeria spent N2.9trn on servicing domestic debts, and N877.5bn on external debt servicing. As at November ’21, the FGN’s debt service to revenue ratio was 76%.

The FGN’s 2022 aggregate expenditure is estimated at N17.1trn. Revenue is expected to be N10.7trn, and the deficit of N6.4trn is expected to be financed by foreign borrowings of N2.57trn, domestic borrowings of N2.57trn, privatisation proceeds of N90.7bn, and multi-lateral /bi-lateral loan drawdowns of N1.16trn. We note that the 2022 FGN budget contains a provision of N443bn for subsidy for January-June. President Buhari is seeking approval of an additional N2.5trn supplementary budget to cater for fuel subsidy.

Last week, The DMO announced that Nigeria raised USD1.25bn (N520bn) through Eurobonds. This makes Nigeria the first African country to access the international capital market (ICM) in 2022. The order book reached USD3.7bn. It included quality investors across the United States, Europe, and Asia. According to the DMO, the proceeds of the Eurobond will be used to finance critical capital projects in the budget. Additionally, it would
contribute directly to external reserves.

Despite the increase in the total public debt stock, as a percentage of GDP (22.5%), this is relatively low when compared with other African economies such as Ghana (81%), Kenya (65%), South Africa (80%) and Egypt (90%). The onus is on the FGN to ensure that borrowed funds are used productively.

Coronation Merchant Bank notes the FGN’s strategic revenue growth initiatives such as the Finance Act and other measures aimed at leveraging technology and automation in improving tax administration, as well as the introduction of a pro-health tax (excise duty on carbonated drinks). These among others are geared towards improving government revenue.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq,, Investorplace, and many more. He has over two decades of experience in global financial markets.

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FG Directs NDDC to Revoke 20 Year-old Unexecuted Projects 



Construction Industry

The Federal Government of Nigeria says it has directed the Niger Delta Development Commission (NDDC) to revoke unexecuted contracts awarded between 2000 and 2019. 

Director of Corporate Affairs, NDDC, Ibitoye Abosede, said in a statement issued on Sunday in Port Harcourt. According to him, the cancellation followed recommendations of the recently-concluded forensic audit report by the NDDC.

“This is to bring to the notice of all contractors engaged by the NDDC as well as stakeholders and the general public, the implementation of the forensic audit report,” she said.

“The Presidency has directed that all contracts awarded by the NDDC from 2000 to December 31, 2019, for which the beneficiary contractors are yet to mobilise to the sites, are cancelled.

“Consequently, all affected contractors are advised to note that all monies earlier received by way of mobilisation for any of the projects are to be promptly refunded

“The contractors are to refund the monies to the commission’s account with the Central Bank of Nigeria.’’

Abosede said that the cancellation was subject to any future re-award in accordance with the Public Procurement Act and in line with the terms of the contracts for the projects.

Earlier in February, some contractors, who identified themselves as members of the Niger Delta Indigenous Contractors Association, alleged that the Niger Delta Development Commission (NDDC) owed them over N2 trillion. This, among many others, has ravaged the effective delivery of the commission. 

The contractors had earlier picketed the headquarters of the NDDC in Port Harcourt, Rivers State, over the alleged outstanding debt.

Several reports have suggested that there are a group of people who have formed a “cartel” running the affairs of the commission secretly. 

In 2019, the former Minister of Niger Delta Affairs, Godswill Akpabio, during an interim inauguration of a NDDC committee in Abuja said “the mandate of the committee is to help create an “enabling environment” for the forensic audit of the NDDC.” 

Akpabio said the corruption and political interference have disrupted the original purpose of setting up the NDDC. 

“I think people were treating the place as an ATM, where you just walk in there to go and pluck money and go away, I don’t think they were looking at it as an interventionist agency,” said Mr Akpabio, a former governor of Akwa Ibom State. 

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Reps Query NPA Over Non-Remittance Of Multi-Million Dollar Revenue



Nigerian ports authority

The House of Representatives, through its Committee on Public Accounts, has initiated an  investigation on the alleged failure by the Nigerian Port Authority to account for billions of naira accruing to the government under its watch.

The chamber, while also probing a multi-million-dollar debt owed the Federal Government by terminal operators at Nigeria’s seaports, requested the authorities of the NPA to explain why it is yet to recover the funds from terminal operators and pay it into the Federation Account.

The NPA has responded to only one of the queries which bothers on the terminal operators’ indebtedness to the government to the tune of $852.094m and N1.897bn.

The query quoted the NPA to have said that the sum of N269.410m out of the N1.8bn had been recovered, while N1.6bn “invoices processed on the encumbered areas remain unpaid.”

“The sum of $504,663,452.37 is volume change on fixed lease fee payment by APMT arising from clauses in the concession agreement between NPA and APMT out of the total sum of $852,093,730.77.

“Bills raised on encumbered areas, which remained unpaid is $19,169,459.00: The following has been paid-GMT-$54,707,700.08, unpaid penalties – $11,922,642.68 and unpaid VAT-$28,693,707.07,” it stated. 

It added that “$92,533,518.72 has been recovered, leaving unpaid lease and Throughout Fee in the sum of $139,970,637.71 made up of $113,982,486.82 and $5,988,150.89, respectively.” 

The committee, which expressed its dissatisfaction with the response, consequently ordered the leadership of the NPA to come and justify their position with that of the OAuGF and provide evidence of remitting the recovered N269.51m and $92.534m to the treasury.

In addition, the lawmakers asked the authority to provide details of the contract agreement/service level agreement, the list of all terminal operators, including a comprehensive schedule of lease fees, through fees and GMT that make up the total amount owed the government by the operators.

The committee assured further that it would also invite the “erring terminal operators to come and justify their reason for not paying the taxes and levies, while the NPA would provide details of community-related issues that hindered concessionaires from accessing the encumbered areas.”

The committee, based on outstanding estate rent, shipping due and service boat of N32,266,183,590.8bn and $67,425,429.88, mandated the authority to provide comprehensive lists/details/schedules of debtors, stating the outstanding debts against each of the defaulters.

The Chairman of the committee, Oluwole Oke, said the panel had directed the “NPA to avail us a comprehensive lists /details/schedule of debtors who are owing $27,977,479.97 being shipping and service boat due. The recovered amount and outstanding debt must be stated against the name of each debtor”.

“NPA is to avail evidence of remittance of the recovered amount totalling $6,647,297.72 to government coffers. NPA is to provide a schedule of debts with 0-3 years’ age and a list of in-house committees responsible for the recovery,” Mr Oke said. 

Investors King recalls that the Office of the Auditor-General for the Federation had issued 12 audit queries against the NPA based on the authority’s financial statement for the 2019 financial year.


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Focus More on Port Rehabilitation, Nigerian Ports Authority Tells FG 



Deep Sea port - Investors King

The Nigerian Ports Authority (NPA) has said the quay walls of the Tin Can Island port require a complete rehabilitation, saying the port is on the verge of collapse.

Managing Director of NPA, Mr. Mohammed Bello-Koko,  while speaking over the weekend stated that the agency had taken a holistic review of the decaying parts of the ports.

“Tin-Can Island Port is practically collapsing. We need to focus our budget on the rehabilitation of those quay walls at the Tin-Can port. We have taken a holistic review of decaying infrastructures at our ports and have decided that it is very important that we rehabilitate Tin-Can and Apapa port,” Bello-Koko stated.

He said the agency had resorted to borrowing in order to sustain the port. It had begun discussions with some lending agencies to lure them into investing in the rehabilitation of ports.

“What we have done is to start talking to lending agencies, even though we don’t intend to lend. We are asking how much money they will invest in the port terminals,” said Bello-Koko, saying the introduction of the Infrastructure Concession Regulatory Commission Act meant that the renewal of concession agreements for terminal operators was no longer done the way it used to be done.

He said the agency had requested for investment companies to invest in the ports.

Bello-Koko also stated that before the agency would also renew the concession agreement of some terminal operators, an agreement must be reached on how to develop the port.

“For us to renew these concession agreements that have expired, about five of them, we need to have categorical commitment from the affected terminal operators on the development of these port terminals. If the terminal operators cannot give us such commitment, then we either give the terminals to someone else or go and borrow money to rehabilitate those ports.”

“However, if we go and borrow money to rehabilitate those ports, then what the terminal operators are paying will have to change. The rates will have to go up. If we don’t do that, these terminal operators will keep managing those places, and the ports will keep collapsing. Because of their financial interest, these terminal operators don’t want us to re-construct the affected port terminals because that will mean stopping them from operating.

“We have had interest from the World Bank, amongst others. Surprisingly, it was the World Bank that actually gave money to the NPA to construct part of Apapa port so many years ago. The World Bank has come again to tell us that if we need funding, they will give it to us.”

He also stated that the agency is watching five terminals to make sure that they are committed to their responsibilities as provided by the port concession agreement.

“Affected terminal operators had been given temporary six-month renewal with conditions to meet before they would have their concession agreement renewed permanently,” Bello-Koko revealed.

“At the point of expiration of any concession agreement, the then Legal Agreement says that the terminal operators can apply for renewal and we will renew. It was after the concession agreement that the ICRC Act came onboard. The ICRC Act requires that there should be a new owner, a new bid and so on and so forth,” he added.

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