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Borrowing Rate of ICT Firms Rises by N30 Billion in March 2022

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Services Tax

The Central Bank of Nigeria (CBN) has revealed that loans obtained by Information and Communication Technology (ICT) firms have risen to a sum of N982.87bn in March, as against January’s N952.06bn, an increase of N30.81 billion.

According to the CBN sectoral analysis of credit report, loans were N952.06bn in January, N973.51bn in February, and N982.87bn in March.

Investors King gathered that prior to this, the CBN had established a legal framework for Open Banking in Nigeria in an effort to stimulate innovation and widen the range of financial products and services available to banks’ customers.

The Regulatory Framework for Open Banking in Nigeria, according to the CBN, establishes standards for data sharing across the banking and payments systems in order to stimulate innovation and expand the range of financial products and services available to bank customers.

Recall that in January, the CBN Governor, Godwin Emefiele had stated that “the policy focus of the bank for 2022 is with a pledge to sustain improved access to finance and credit for households and businesses, mobilise investment to boost domestic productivity, enable faster growth of non-oil exports, and support employment generating activities”.

He claimed that the country was able to alleviate some of the COVID-19 outbreak’s economic consequences.

He further stressed the necessity of all stakeholders cooperating to build a more resilient economy that can survive external shocks while still supporting growth and wealth creation in key areas.

Speaking about the importance of creating an efficient infrastructure ecosystem in Nigeria and the importance of improved infrastructure in the development of the Nigerian economy, he revealed that all necessary approvals had been obtained for the Infrastructure Corporation to begin operations in early 2022.

Further findings by Investors King revealed that the ICT sector, in the first quarter of 2022, recorded a growth at 20.54 per cent (year-on-year), 12.68 per cent points increase from the rate of 7.86 per cent recorded in the same quarter of 2021, and 14.84 per cent points higher than the rate recorded in the preceding quarter. The Quarter-on- Quarter growth rate recorded in the first quarter of 2022 was -1.87 per cent.

“The Information and Communications sector contributed 10.55 per cent to the total Nominal GDP in the 2022 first quarter, higher than the rate of 9.91 per cent recorded in the same quarter of 2021 and higher than the 9.88 cent it contributed in the preceding quarter”, the report noted.

Loans

Senate Initiates Probe into N30tn Ways and Means Loans under Buhari Administration

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Muhammadu Buhari

The Nigerian Senate has embarked on a comprehensive investigation into the disbursement and utilization of the N30 trillion Ways and Means loans obtained by the Central Bank of Nigeria (CBN) during the administration of former President Muhammadu Buhari.

The Ways and Means facility allows the CBN to provide financial support to the government to cover budget shortfalls.

The decision to probe the massive loans comes amid concerns about the transparency and accountability surrounding the utilization of these funds, particularly as the country grapples with economic challenges, food crises, rising inflation, and worsening insecurity.

The Senate’s investigation aims to shed light on how the substantial overdrafts from the CBN were acquired and expended under the leadership of former President Buhari.

There is growing apprehension that the indiscriminate spending of the overdrafts, particularly during Godwin Emefiele’s tenure as CBN governor, may have contributed significantly to the current economic predicament facing the nation.

The probe will delve into the details of the N30 trillion overdrafts, with a specific focus on examining the purpose for which the funds were allocated and how they were utilized.

Also, the Senate will scrutinize the N10 trillion disbursed under the Anchor Borrowers Scheme, as well as the utilization of $2.4 billion out of the $7 billion earmarked for forex transactions.

The initiative underscores the Senate’s commitment to ensuring transparency, fiscal responsibility, and prudent financial management in the country’s economic affairs.

It is anticipated that the probe will unearth vital insights into the financial transactions of the past administration, enabling corrective measures to be taken to address any mismanagement or discrepancies discovered.

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Foreign Loans Dominate Nigeria’s 2023 Capital Importation, Hits $2.31bn – NBS Report

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US Dollar - Investorsking.com

In 2023, foreign loans dominated Nigeria’s capital importation, according to the latest report from the National Bureau of Statistics (NBS).

The report reveals that out of the total $3.91 billion foreign investment inflow, foreign loans accounted for $2.31 billion, representing 59.1% of the total capital importation.

The NBS data indicates a substantial increase in foreign capital inflow compared to previous quarters.

The final quarter of 2023 saw a notable surge, with foreign capital importation rising from $654.65 million in the third quarter to $1.09 billion.

This surge reflects increased investor confidence and interest in Nigeria’s economic prospects.

However, the dominance of foreign loans in the capital importation landscape raises concerns about Nigeria’s debt profile and sustainability.

While foreign loans can provide crucial funding for development projects and infrastructure, excessive reliance on borrowing poses risks to the country’s fiscal health and economic stability.

It underscores the urgent need for prudent debt management and strategies to diversify funding sources.

The breakdown of the capital importation further reveals that Nigeria received $433.87 million in the first quarter, $771.53 million in the second quarter, $507.71 million in the third quarter, and $594.75 million in the fourth quarter as foreign loans.

The report underscores the importance of addressing structural challenges and creating an enabling environment to attract diverse forms of foreign investment beyond loans.

It emphasizes the need for policies that promote sustainable economic growth, attract foreign direct investment, and reduce reliance on external borrowing.

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Nigeria’s Debt May Exceed N107.38tn with New Borrowings

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Loan - Investors King

Nigeria faces a looming debt crisis as recent approvals for fresh borrowings could propel the nation’s total debt to surpass N107.38 trillion.

The approval initiated by President Bola Tinubu’s administration includes plans to borrow $7.8 billion and €100 million as part of the Federal Government’s 2022-2024 borrowing strategy.

These funds are earmarked to finance critical sectors such as infrastructure, health, education, agriculture, and security, among others.

Tinubu emphasized the necessity of foreign loans to bridge financial gaps and restore economic stability in light of recent reforms, notably the removal of fuel subsidies.

Furthermore, additional financial support from the African Development Bank and the World Bank, totaling $1 billion and $2 billion respectively, underscores Nigeria’s urgent need for economic revitalization amidst challenging times.

As of September 2023, Nigeria’s total debt stood at N87.91 trillion, comprising N31.98 trillion in external debt and N55.93 trillion in domestic debt.

The recent approvals, if fully implemented, could raise the debt burden by at least 22.15%, reaching the projected N107.38 trillion mark by 2024.

Notably, Nigeria aims to maintain a debt-to-GDP ratio of 40%, yet projections indicate this figure may soar to 53.06%, signaling potential fiscal strain.

The utilization of Ways and Means advances, a provision allowing short-term borrowing from the Central Bank, further complicates the debt landscape.

While the government emphasizes economic reforms and infrastructure development, concerns linger over the sustainability of Nigeria’s borrowing trajectory.

Analysts caution that securing and implementing these loans may prove challenging, as evidenced by delays in previous loan disbursements.

Amidst growing debt burdens, Finance Minister Wale Edun acknowledges the need for fiscal prudence, advocating for reduced reliance on borrowing to stabilize the economy.

As Nigeria navigates its financial landscape, the balance between development aspirations and fiscal sustainability remains a critical challenge.

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