Nigeria’s rising borrowing amid low revenue generation continues to drag on the nation’s resources and development as shown by the latest report from the Debt Management Office.
The report showed the Federal Government spent N896.56 billion on debt servicing in the first quarter (Q1) of 2022, representing an increase of 109%.
In 2021, Nigeria spent a whopping N2.93 trillion on debt servicing payments and N3.83 trillion in 15 months. A further breakdown of the report showed between October and December 2021, Africa’s biggest economy spent a total sum of N310.5 billion on domestic debt servicing and $286.35 million or N118.9 billion on external debt servicing, making it a total of N429.4 billion.
However, in the first quarter of 2022, the country spent N668.69 billion on domestic debt servicing alone and another $548.79 million or N227.87 billion on external debt servicing, making it a total of N896.56 billion. External debt servicing was calculated using the central bank’s official exchange rate of N415.22/US$.
This shows that the total amount Nigeria spent on debt servicing jumped 109% from N429 billion recorded in the final quarter of 2021 to N896 billion in March 2022.
In the first three months ended March 2022, Nigeria’s debt stock grew by N2.04 trillion from N39.56 trillion it was by December 2021 to N41.60 trillion.
At a recent event organised by the World Bank in Abuja, Mrs. Zainab Ahmed, the Minister of Finance, Budget and National Planning, said despite revenue increasing, the rising cost of subsiding fuel and other expenses continued to drag on the nation’s ability to service its debt.
She said, “Already we have borrowing increasing significantly and we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate so it is a very difficult situation.”
In a similar tone, the International Monetary Fund (IMF) had warned that the rising cost of servicing debt in Africa’s largest economy could hit 100% of the nation’s revenue by 2026 if adequate measures are not implemented to improve revenue generation.
Ari Aisen, IMF’s Resident Representative for Nigeria stated this while presenting the Sub-Saharan Africa Regional Economic Outlook report in Abuja.
Aisen said, “The biggest critical aspect for Nigeria is that we have done a macro-fiscal stress test, and what you observe is the interest payments as a share of revenue and as you see us in terms of the baseline from the federal government of Nigeria, the revenue almost 100 percent is projected by 2026 to be taken by debt service.
“So, the fiscal space or the amount of revenues that will be needed and this without considering any shock is that most of the revenues of the federal government are now, in fact, 89 percent and it will continue if nothing is done to be taken by debt service.”
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Nigeria’s Presidential CNG Initiative Allocates N100bn for CNG Buses and EV Adoption
The Presidential Compressed Natural Gas (CNG) Initiative has allocated N100 billion to expedite the deployment of CNG buses nationwide, according to a statement released on Wednesday.
The initiative, designed to catalyze an Auto-gas and Electric Vehicle (EV) revolution in mass transit and transportation, aims to enhance sustainability and cost-effectiveness.
The statement revealed that the fund would be instrumental in supporting the adoption of auto-gas and electric vehicles, signaling a commitment to a more sustainable and economical future in the transportation sector.
The Presidential CNG Initiative plans to leverage over 11,500 CNG and electric-fueled vehicles, along with the deployment of 55,000 conversion kits.
This strategic approach is intended to reduce transportation costs for Nigerians and mitigate the challenges posed by the rising cost of living.
Under the Renewed Hope Agenda, the Presidential CNG Initiative is dedicated to realizing the President’s vision, guided by its steering committee led by FIRS Chairman Zacch Adedeji.
The statement highlighted recent achievements, including strategic technical partnerships and the ongoing commissioning of CNG Conversion centers in key states such as Lagos, Abuja, Kaduna, Ogun, and Rivers.
Several more centers are slated for commissioning in the coming weeks, reflecting the initiative’s momentum and commitment to achieving its objectives.
Nigeria’s Power Transformation: 53 Projects Worth N122bn on Track for May 2024 Completion
The Central Bank of Nigeria (CBN), in collaboration with the Transmission Company of Nigeria (TCN) and power distribution companies, is set to complete 53 power projects by May next year.
Valued at N122 billion, these projects aim to add over 1,000 megawatts to TCN’s wheeling capacity.
During a recent tour of three ongoing projects in Lagos, TCN’s Programme Coordinator, Mathew Ajibade, assured that the projects were not abandoned, refuting speculations.
He confirmed that work is progressing smoothly and is expected to be completed by May 2024, as initially planned.
Assistant Director/Head of Infrastructure Finance Office at the CBN, Tumba Tijani, highlighted the CBN’s support for the power sector, revealing that the bank released a loan at a 9% interest rate in August last year for the projects.
The funding, part of the Nigeria Electricity Market Stabilisation Facility-3, amounts to N122,289,344 and aims to address transmission/distribution bottlenecks, enhance supply to end-users, and unlock unutilized generation capacity.
Tijani disclosed that N85.43 billion has been disbursed into the Advance Payment Guarantee account of the 53 contractors responsible for executing the projects.
The comprehensive project list includes the delivery of power transformers, re-conductoring existing transmission lines, upgrading existing substations, and constructing 33KV line bays.
The initiative reflects a concerted effort to enhance Nigeria’s power infrastructure and meet growing energy demands.
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