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A Healthy Ratio for the Public Debt Stock – Coronation Merchant Bank



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According to Nigeria’s Debt Management Office (DMO), Nigeria’s total public debt rose by 5.2% quarter on quarter (q/q) or N2  trillion from N39.5 trillion at end-December 2021 to N41.6 trillion at end-March 2022. The total public debt increased by 25.7% or N8.5 trillion when compared to the corresponding period in 2021.

As at end-March 2022, public debt is equivalent to 24% of 2021 nominal GDP, relatively low when compared with other African economies such as Ghana (80%), Kenya (68%), South Africa (70%) and Egypt (93%). This is in line with the DMO’s debt management target of a debt-to-GDP ratio of 40% 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.

Total domestic debt increased by 5.4% q/q and 21.1% year-on-year to N24.9 trillion as at end-March 2022. This can be attributed to increases in FGN bonds (2% q/q), Nigerian treasury bills (16% q/q) and FGN Savings bond (10.3% q/q). The total domestic debt currently accounts for 60% of total public debt.

Within domestic debt, FGN instruments account for 80.6% of total domestic debt, while subnationals represent 19.4%. Bonds and NTBs account for 92.6% of total FGN domestic debt while FGN sukuk, treasury bond, savings bond, green bond, and promissory notes collectively contributed 7.4% to the total.

Based on the DMO’s bond issuance calendars, the debt management office set out to raise a total volume of between N1.1 trillion – N1.2 trillion in H1 ‘22. However, the DMO has raised N1.8 trillion in the first half of the year. This is 50% higher than the set upper limit within the calendar for this timeframe. In our view, the increased supply of FGN bonds should lead to upticks in yields across the curve.

The share of states and the FCT’s domestic debt increased by 8.6% q/q to N4.8 trillion as at end-March 2022 from N4.5 trillion recorded in the previous quarter. On a y/y basis, it increased by 17.5%. The most indebted states were Lagos (N780bn), Ogun (N242bn) and Rivers (N226bn).

We note 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-April ‘22, the stock of CBN’s ways and means advances stood at N16.6trn.

External debt stock stood at USD39.9bn (N16.6trn) as at end-March ‘22. This represents increases of 4.8% q/q and 33.3% year-on-year. The rise can be partly attributed to the USD1.25bn Eurobond issued by the FGN in March 2022. As at Q1, the external debt stock accounts for 39.9% of total public debt.

Within external debt, multilateral, and bilateral loans account for 58.7%, while commercial loans (i.e., Eurobonds and Diaspora bond) represent 39.8%. As at end-March ’22, Nigeria spent N669bn on servicing domestic debt, and N229bn on external debt servicing.

Based on newswires, the FGN suspended its plans to raise an additional Eurobond worth USD950m. The suspension is due to unfavourable market conditions. We note that yields in Nigeria’s Eurobond market have recorded steady upticks on the back of recent monetary policy tightening in advanced economies.

Based on World Bank estimates, each state is expected to record a loss of N5bn in revenue this year. The projected loss is on the back of an expected decrease in Federal Accounts Allocation Committee (FAAC) payouts to states. The Nigerian National Petroleum Corporation has deducted N947.5bn from its remittance to FAAC between January -April 2022. Furthermore, the World Bank considers Nigeria’s public debt as sustainable and projects that it will account for 36% of GDP in 2022.

We suspect that this figure is inclusive of CBN’s ways and means as well as AMCON debt.

Insufficient revenue continues to hamper Nigeria’s fiscal landscape, resulting in one of the highest debt-service-to-revenue ratio (76% as at November ’21) among African economies. Regarding oil revenue, the presence of the fuel subsidy and low oil production continue to undermine the expected benefits from rising oil price (Bonny light closed at USD127/b on 21 June ‘22). Meanwhile, production has averaged 1.5mbpd between January – May’22. This is below OPEC’s quota of 1.7mbpd and the 2022 budget of 1.6mbpd.

On non-oil, the FGN is taking forward steps towards boosting non-oil revenue through strategic initiatives under the Finance Act. While these initiatives are laudable, their effective implementation is critical. To assist with improving current macroeconomic conditions, the borrowed funds need to be channelled towards well-targeted expenses that would support GDP growth, ease supply-chain bottlenecks and reduce the pressure on the country’s unemployment rate.

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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Nigeria’s Untapped Coffee Sector Holds the Key to $2 Billion Annual Revenue



People stand in front of coffeeshops in Rembrandtplein in Amsterdam

Amidst declining foreign reserves and the need for alternative revenue streams, Nigeria’s overlooked coffee industry emerges as a potential powerhouse capable of contributing over $2 billion annually to foreign exchange earnings.

Industry experts emphasize the necessity for strategic investments and modernized farming practices to unlock the full economic potential of the coffee sector.

While Nigeria is not among the top 10 coffee producers in Africa, the country’s untapped coffee industry holds the promise of significant financial gains, job creation, and sustainable agricultural development.

The urgency for revitalization comes as Nigeria grapples with a decline in foreign reserves, dropping from $38.25 billion in September 2022 to $33.23 billion in the third quarter of 2023.

Salihu Imam, Chairman of the National Coffee and Tea Association of Nigeria, Oyo State, highlighted the global significance of coffee, stating, “Coffee is the second most traded/valuable of all commodities and first in Agricultural commodities in the world.”

The potential economic impact extends beyond immediate financial gains, with Nigeria positioning itself as a key player in the global coffee trade.

Despite its potential, Nigeria’s coffee exports remain modest, producing less than one million bags annually.

In contrast, Ethiopia, the largest coffee exporter in Africa, is projected to produce 8.25 million bags. Experts suggest that Nigeria, with its unique coffee varieties, could generate $2 billion annually.

Segun Lary-Lean, President of the West Africa Specialty Coffee Association, emphasized the robust global demand for coffee, comparing it to water in Western countries.

He noted the significant earnings of coffee-producing nations like Brazil, Colombia, Vietnam, and Kenya, which experienced a 17% increase in coffee earnings.

In a call to action, industry players urge the Federal Government to prioritize strategic investments, modernized farming practices, and value-added processing to harness the coffee sector’s full economic benefits.

Unlocking the potential of Nigeria’s coffee industry stands not only as a financial opportunity but as a catalyst for broader economic growth and diversification.

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Nigeria’s Q3 Foreign Trade Skyrockets: Crude Oil Revenue Surges by 83.23% to N8.54tn



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Nigeria’s foreign trade expanded by 53.16% year-on-year to N18.80 trillion in the third quarter (Q3) of 2023.

The surge was primarily propelled by an impressive 83.23% spike in crude oil revenue to N8.54 trillion, a substantial increase from N4.66 trillion recorded in the same quarter of the previous year.

This was reported by the National Bureau of Statistics (NBS) in its ‘Foreign Trade in Goods Statistics (Q3 2023)’ that highlighted the nation’s trade balance and economic outlook.

The report noted that total exports rose by 60.78% to N10.35 trillion.

Mr. Gbenga Komolafe, CEO of the Nigerian Upstream Petroleum Regulatory Commission, emphasized the importance of viability in retaining exploration leases.

He said, “Based on PIA (Petroleum Industry Act), the commission is focused on delivering value for the nation so only firms that are technically and financially viable will keep their leases.”

The report outlined the dominance of crude oil in exports, constituting 82.50% of total exports, while non-crude oil products contributed N677.57 billion or 6.55% of total exports. The positive trade balance stood at N1.89 trillion.

The top five export destinations for Nigeria included Spain, India, The Netherlands, Indonesia, and France, collectively accounting for 45.98% of total export value.

On the import side, China, Belgium, India, Malta, and the United States were the major sources, comprising 57.18% of total imports, valued at N4.84 trillion.

While these promising trade figures indicate a robust economic performance, challenges in the oil sector persist, with the country’s crude oil production below the 2023 target.

The government’s commitment to increasing production aims to boost revenue and fund strategic national projects, as highlighted by Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri.

The surge in exports, possibly linked to the recent naira devaluation, underscores the intricate relationship between economic policies and trade dynamics, shaping Nigeria’s economic trajectory.

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Federal Government to Earn Over $500 Million in INTELS Deal



intels nigeria limited

The Nigerian Ports Authority (NPA) has unveiled an agreement with INTELS Nigeria Limited that is set to bring substantial financial gains to the federal government.

The comprehensive deal, negotiated over weeks, not only resolves a contentious pilotage contract but also promises to bolster Nigeria’s coffers by over $500 million.

The accord encompasses a multifaceted approach to financial benefits, including an interest waiver of $193,317,556 and a significant reduction in the interest rate on outstanding debt.

The debt, originally at a six-month London Interbank Offer Rate (LIBOR) + 6.5%, has been revised to a more favorable six months Secured Overnight Financing Rate (SOFR) + 3%.

Such financial restructuring is anticipated to save the government a staggering $326.8 million over the next 15 years.

NPA, in a detailed breakdown, elucidated that the agreement further involves spreading the debt repayment over 15 years, with the initial two years being interest-free.

Additionally, there is a commendable reduction in the commission percentage, dropping from 28% to 24.5%, a move that aligns with the government’s commitment to optimizing financial resources.

The Minister of Marine and Blue Economy, Adegboyega Oyetola, received accolades for his tireless efforts in steering the negotiations to a successful conclusion. NPA expressed gratitude for his commitment to putting Nigeria first, emphasizing the critical role played by the minister in resolving the long-standing INTELS dispute.

Former Vice President Atiku Abubakar, however, denied benefiting from the reinstatement of INTELS contracts.

He clarified that his divestment from the company remains unchanged, emphasizing that he cannot be a beneficiary of the restored pilotage monitoring business.

NPA’s move to ensure a resolution with INTELS is not only seen as a financial triumph but also as a strategic step towards fostering economic stability.

The agreement is poised to have a positive ripple effect on revenue generation and underscores the government’s commitment to diplomatic and economically viable solutions.

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