Connect with us


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



US Dollar -

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.

Continue Reading


2025: The End of Gas Flaring

The Federal Government through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has inaugurated a 12-member ‘Gas Flare Commercialization Program Team’ to manage the nation’s gas flaring.



gas flaring

The Federal Government through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has inaugurated a 12-member ‘Gas Flare Commercialization Program Team’ to manage the nation’s gas flaring.

According to Engineer Gbenga Komolafe, the Chief Executive of NUPRC, gas flaring in the oil gas industry has been a continuous menace that needs to be eradicated because of its adverse effect on the people’s health, the Environment and also a major resource waste and value erosion to the country.

Gbenga mentioned that to monetize gas resources is to take a positive step toward securing energy security, especially in this period of global energy transition. He said as a nation, Nigeria needs to ensure it harnesses every available gas resource in other to create value.

He declared that the NUPRC is resuming the procedure of issuing flare sites to competent technical companies, after a complete bidding process.

This process is crucial and important in respect of the direction of the federal government’s policy to ensure every gas resource is properly developed for national development.

He laid emphasis that the wasteful disposal of natural gas is not only hazardous with serious health and environmental consequences but also a waste of resource and value to Nigeria.

In addition to this, he stated that the FG declared the period 2021 to 2030 as the DECADE OF GAS, a period which the country must change direction from oil centered exploitation to a gas-focused industrial development.

Although the World Bank has set 2030 as the target year to end gas flaring, Nigeria has set the country’s deadline tp 2025.

President Muhammadu Buhari made a commitment towards the Paris Agreement during the COP26 Leaders’ Summit to achieve Net Zero carbon emissions by 2060,” he said.

Continue Reading


China Reaffirms Commitment to Maintaining Cooperation With Africa

Wu- Peng, has reaffirmed China’s commitment to maintaining cooperation with Africa



China Nigeria

The director general of the ministry of foreign affairs of China, Wu- Peng, has reaffirmed China’s commitment to maintaining cooperation with Africa.

Wu-Peng disclosed this at a meeting held with African journalists under the auspices of the China Africa Press Centre (CAPC) in June 2022 in Beijing.

Quoting the president of China, Xi Jinping, Wu-Peng said China will work hand in hand with African countries to implement linked programs in the next three years”.

According to Wu-Peng, this includes programs related to the medical and health sector, poverty alleviation, agricultural growth and promoting investments.

We’re still fighting to contain Covid-19 since the outbreak of the pandemic, China has so far provided about 260 million doses of vaccines to 55 African countries and African Union,” the Director General said.

He also mentioned that China had also made provision for about 120 batches of emergency supplies to African countries and they all have diplomatic relations with China and also contributed to Africa’s early recovery from the Covid-19 pandemic.

China has already constructed the African CDC in Addis Ababa and it will be completed in 2023.

The other program I would like to make mention is the agricultural sector. When FOCAC was held in 2021, there was no Russia-Ukraine crisis, yet we focus and invested in Agriculture in Africa.

The reason been, we believe in the potential of Agriculture in Africa, the growth and development is huge, there are still lots of arid land in Africa, Wu-Peng stated.

Unfortunately, Africans still have to import grapes from the outside which costs a lot of currency and actually damages Africa’s international balance sheet.”

He said that the failure to prioritize agriculture could obstruct fast economic growth in Africa, suggesting that more should be done through Public Private Partnership (PPP) to ensure food security.

The director general laid emphasis on the need for proper implementation of the report from the FOCAC meetings to bring to life the realization of set goals and objectives.

“This does not make sense, you have lands, you have labor forces, I think we just need the right policy to promote price investments in industrial large scale farms to improve our food security.

Why this is has become very important is due to the Ukraine crisis, food prices globally surged and going forward, we must finish construction of the project in the nearest future.

African governments have already noticed developments of agriculture is a huge priority to deal with the crisis of hike in food prices, we want Africas countries to have up to date plans from FOCAC meetings and the findings of the results.

“Usually, when we have FOCAC meetings we just produce documents, we need more concrete actions, we must be focused,” the director general said.

Continue Reading


Inflation Rises to 17 Year High in Nigeria

Inflation rate, grew at a 19.64% rate in July, the highest since September 2005 when inflation peaked at 24.32%



consumer prices

Prices of goods and services rose to a 17-year-high in Africa’s largest economy Nigeria in the month of July, the National Bureau of Statistics (NBS) reported on Monday.

The Consumer Price Index (CPI), which measures the inflation rate, grew at a 19.64% rate in July, the highest since September 2005 when inflation peaked at 24.32%. This was 1.04% higher than the 18.60% recorded in June 2022.

On a monthly basis, inflation expanded by 1.817%, an increase of 0.001% from 1.816% filed in June 2022.

As expected, food inflation also grew by 0.99% from 21.03% year-on-year in July 2021 to 22.02% in July 2022. According to NBS, the increase in the food sub-index was caused by increases in prices of Bread and cereals, Food products n.e.c, Potatoes, yam and other tubers, meat, fish, oil, and fat.

On a month-on-month basis, the food inflation rate in July was 2.04%, this was a 0.01% insignificant decline compared to the rate recorded in June 2022 (2.05%). This decline is attributed to a reduction in the prices of some food items like Tubers, Maize, Garri, and Vegetables.

Rising economic uncertainties amid a series of policy changes like the increase in duty on imported raw materials, high electricity tariffs,  fuel, etc needed to manufacture the necessary food items are responsible for the persistent increase in inflation.

Also, the extended decline in the value of the Nigerian Naira against its global counterparts has made foreign goods or imported goods expensive for Nigerians. Therefore, manufacturing companies are now passing the increase to final consumers already struggling with low earnings and a high unemployment rate.

Continue Reading