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Budget Deficit: Crisis Looms as International Lenders Ignore Nigeria

The DMO disclosed that global investors and lenders are shunning Nigeria having been labeled with an economic rating of Category “B”.

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U.S Dollar - Investors King

Nigeria could be heading for a cash crunch as international lenders ignore Africa’s largest economy, according to the Debt Management Office (DMO).

The DMO disclosed that global investors and lenders are shunning Nigeria having been labeled with an economic rating of Category “B”.

It would be recalled that Moody’s and Fitch ratings recently downgraded Nigeria to Category ‘B’ economy.

If this persists, Nigeria will struggle to finance its 2023 budget deficit estimated at N10.7 trillion, more than half of the nation’s total budget of N20.5 trillion, Investors King reports. 

According to the Director-General of the Debt Management Office (DMO), Patience Oniha, Nigeria must improve its revenue generation and devise alternative sources of funds both in the international and local markets. 

While appearing before the House of Representatives Committee on Aids, Loans and Debt Management to defend the DMO’s 2023 budget, Oniha noted that the country is now looking towards new lenders in America and Europe which might come with stringent conditions. 

She stated that before now, Nigeria enjoyed a great deal of courtesy in the global financial market. “The reality is that if it were before, by now we would have issued Eurobonds to raise the money and we would be in good business. The international markets are not looking for countries with our ratings –B ratings,” she said. 

In addition, global crises such as the invasion of Ukraine by Russia which has led to energy crises and global inflation, and the threat of recession have exacerbated the situation for most countries. 

“Inflation rates are high, interest rates are high and investors are saying there are a lot of uncertainties as to what will happen” she noted. 

Oniha further revealed that global investors now feel comfortable putting their money in securities issued by the G-7 countries

The G-7 countries include Canada, France, Germany, Italy, Japan, the United States, and the United Kingdom. 

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Economy

Global Growth to Drop Below 2% in 2023, Says Citi

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Citigroup on Wednesday forecast global growth to slow to below 2% next year, echoing similar projections by major financial institutions such as Goldman Sachs, Barclays, and J.P. Morgan.

Strategists at the brokerage cited continued challenges from the COVID-19 pandemic and the Russia-Ukraine war — which skyrocketed inflation to decades-high levels and triggered aggressive policy tightening — as reasons behind the outlook.

“We see global performance as likely (being) plagued by ‘rolling’ country-level recessions through the year ahead,” said Citi strategists, led by Nathan Sheets.

While the Wall-Street investment bank expects the U.S. economy to grow 1.9% this year, it is seen more than halving to 0.7% in 2023.

It expects year-on-year U.S. inflation at 4.8% next year, with the U.S. Federal Reserve’s terminal rate seen between 5.25% and 5.5%.

Among other geographies, Citi sees the UK and euro area falling into recession by the end of this year, as both economies face the heat of energy constraints on supply and demand front, along with tighter monetary and fiscal policies.

For 2023, Citi projects UK and euro area to contract 1.5% and 0.4%, respectively.

In China, the brokerage expects the government to soften its zero-COVID policy, which is seen driving a 5.6% growth in gross domestic product next year.

Emerging markets, meanwhile, are seen growing 3.7%, with India’s 5.7% growth — slower than this year’s 6.7% prediction — seen leading among major economies.

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Economy

Fourth Mainland Bridge: Lagos State Shortlists Three Companies, Budgets $2.5 Billion

The shortlisted bidders are Mota-Engil (Nigeria and Africa) CCCC and CRBC Consort; CGGC-CGC joint venture; and CCECC and CRCCIG Consortium.

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Lagos state government has shortlisted three multinational companies as bidders for the construction of a $2.5 billion fourth mainland bridge.

The shortlisted bidders are Mota-Engil (Nigeria and Africa) CCCC and CRBC Consort; CGGC-CGC joint venture; and CCECC and CRCCIG Consortium.

According to the Special Adviser to the Governor on Public-Private Partnerships (PPP), Ope George, the Fourth Mainland Bridge was a proposed PPP transport infrastructure development that includes the construction and operation of a greenfield tolled road and bridge with a design speed of 120kph, including the development of adjacent real estates.

It could be recalled that Lagos State Governor, Babajide Sanwo-Olu, earlier announced that construction on the fourth mainland bridge will begin as soon as a preferred bidder is announced.

Investors King understands that the construction of the fourth mainland bridge will be strategic in easing traffic in the most populous state in Nigeria. It is estimated that Lagos state has a population of almost 20 million.

Besides, after completion, the bridge has the potential to open a new phase of investment opportunities to Lagos state. Already, Lagos has the largest economy in Nigeria and one of the largest in Africa.

The idea of a fourth mainland bridge to complement and ease traffic on the third mainland bridge which was built by the former military president, Ibrahim Babangida was conceptualised during the administration of former governor Bola Tinubu. 

Although construction was planned to commence in 2017, nothing significant towards the commencement of the bridge was done until now.

George added that the bridge is expected to become the second longest in Africa featuring three toll plazas, nine interchanges, a 4.5km lagoon bridge, and an eco-friendly environment.

“The fourth mainland bridge which will span about 34 kilometres is projected to start from Abraham Adesanya in Ajah, on the Eti-Osa-Lekki-Epe corridor and transverse the north-west towards the lagoon shoreline of the Lagos-Ibadan expressway via Owutu/Isawo in Ikorodu,” he said.

He concluded that the preferred bidder would be announced before the end of the year.

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Economy

Abuja – Kaduna Train Service Postponed by Few Days to Sort Ticketing; Minister for Transportation

Resumption for Abuja to Kaduna train has been postponed due to the need to sort out ticketing

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Lagos-Ibadan Train Services - Investors King

The resumption date of the Abuja to Kaduna train has been postponed due to the need to sort out ticketing, the Minister of Transportation, Mu’azu Sambo disclosed this during a visit to the Rigasa train station ahead of the resumption.

According to the minister, the need to ensure that more security measures are put in place and booking tickets are sorted out necessitates the postponement.

The minister added that although he could not give a definite date for the resumption of the rail service, the resumption would however not be more than a week.

He disclosed that the ministry is 90 percent ready to commence operation along the route. 

“The federal government has introduced a new system of purchasing tickets. It is the beginning of security checks that will enable the government to ascertain who boards the train at every point in time.” the minister stated. 

Investors King earlier reported that Abuja to Kaduna train service will resume on Monday. 

The earlier scheduled date for the resumption follows the minister’s statement at the presidential briefing that the train service along the Abuja to Kaduna route will resume operation before the end of this month. 

It would be recalled that Abuja to Kaduna train service was suspended following the attack on the train on 28th March 2022 when terrorists planted explosives that derailed the train.

The attack led to the death of no less than nine passengers while 60 were abducted. 

They were however released in batches after spending several months with the terrorists. 

Muazu had on several occasions disclosed that service along the route will not resume until all those held in captivity have been released and better security measures put in place to prevent a recurrence. 

While fielding questions from journalists yesterday, the minister disclosed that the number of daily trips would be reduced, and the use of National Identity Number would be strictly requested as part of strategies to secure passengers.

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