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A Rise in Public Debt in Quarter Three – Coronation Merchant Bank

Nigeria’s total public debt rose by 2.9% q/q or N1.3trn to N44.1trn at end-September ’22 from N42.8trn at endJune ’22.



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According to Nigeria’s Debt Management Office (DMO), Nigeria’s total public debt rose by 2.9% q/q or N1.3trn to N44.1trn at end-September ’22 from N42.8trn at endJune ’22. On a y/y basis, total public debt increased by 16.1%.

As at end-September’22, public debt is equivalent to 25.4% of 2021 nominal budget. This is relatively low when compared with other African emerging economies such as Egypt (87%), Ghana (82%), South Africa (69%), and Kenya (68%). 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 2.7% q/q and 20.1% y/y to N26.9trn as at end-September ’22. This can be partly attributed to increases in FGN Bonds (3.9% q/q), NTB’s (0.8% q/q) and FGN savings Bond (19.6% q/q).

For domestic debt, FGN instruments accounted for 75.6% of total domestic debt while subnationals accounted for 19.9%. Bonds and NTBs accounted for 94% of total FGN domestic debt while FGN sukuk, treasury bond, savings bond, green bond and promissory notes collectively contributed to 5.7% of the total.

Domestic debt for states, the FCT inclusive, increased by 1.9% q/q to N5.4trn at endSeptember ’22 from N5.3trn recorded in the previous quarter. On a y/y basis, it rose by 27.7%. The most indebted states include Lagos (N877bn), Delta (N272bn), and Ogun (N242bn).

The FGN has raised c.N24trn via the CBN’s ways and means advances and has hinted at a proposal to securitize the advances through the local debt capital market. Total domestic debt is likely to increase if the planned securitisation materialises and in addition to AMCON debt.

External debt stock stood at USD39.7trn (N17.1trn) as at end-September ’22. This represents a marginal decline of 1% or USD403m q/q. The sustained elevated external debt figures can be partly attributed to upticks in loans from the International Development Association (3.9% q/q), and China (13.8% q/q).

Furthermore, the marginal decline in the external debt stock reflects Nigeria’s absence from the international capital market, due to the hawkish monetary policy stance adopted by the central banks across several advanced economies. Overall, the external debt stock accounts for 38.6% of total public debt.

Within the external debt, multilateral lenders such as the World Bank, IMF, African Development Bank Group (AfDB) and bilateral lenders like China, Germany, Japan, India and France accounted for 56.4%, while commercial loans (i.e. Eurobonds and Diaspora) represent 39.4% of total external debt.

As at end-September, the FGN has spent N3.09trn on debt servicing (N2.2trn on domestic debt servicing and N890bn on external debt servicing) compared with the budgeted N3.95trn for debt servicing in the FGN’s 2022 budget. It is worth highlighting that the debt-service-to-revenue ratio stood at 83% as at August ’22.

Underperformance with revenue generation continues to hamper the country’s fiscal landscape. The increase in the total debt stock can be partly attributed to new borrowings by the FGN for deficit financing. Strategic steps towards improving non-oil revenue such as improving tax collection efficiency, incorporating more informal businesses into the tax net and strengthening anti-smuggling measures should be prioritized.

The effective implementation of the strategic revenue growth initiatives would assist in boosting revenue, strengthening the fiscal landscape and will support real GDP growth.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq,, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Nigeria Secures $1.05bn Oil-Backed Loan to Bolster Economy



Bola Tinubu

Nigeria has successfully secured a significant oil-backed loan worth $1.05 billion from the African Import Export Bank.

The syndicated loan, set to be disbursed next month, represents a crucial step in the country’s efforts to revive its economy and enhance foreign exchange liquidity.

This loan forms part of a larger $3.3 billion prepayment facility orchestrated by Afreximbank, with repayment terms intricately linked to crude oil cargoes from the Nigerian National Petroleum Company Ltd.

The agreement, confirmed by Afreximbank’s Senior Executive Vice President for Finance, Administration, and Banking, Denys Denya, underscores the confidence in Nigeria’s oil reserves and its potential to generate revenue even amid global economic uncertainties.

The financial injection is expected to provide a much-needed boost to Nigeria’s economy, which has been grappling with various challenges, including fluctuating oil prices, currency devaluation, and inflationary pressures.

By leveraging its oil reserves, Nigeria aims to enhance its foreign exchange reserves and stabilize its local currency, thereby bolstering investor confidence and stimulating economic growth.

The timing of this loan is particularly significant as Nigeria seeks to navigate the aftermath of the COVID-19 pandemic and the economic disruptions caused by geopolitical tensions, including the Russia-Ukraine conflict.

With oil prices experiencing fluctuations and market uncertainties looming, the loan serves as a strategic mechanism to mitigate financial risks and enhance economic resilience.

The Nigerian National Petroleum Company Limited had previously announced plans to utilize funds from the $3.3 billion financing deal secured from Afreximbank to support the Federal Government in stabilizing the country’s exchange rate.

The adoption of a conservative crude oil price benchmark of $65 per barrel for the loan facility reflects a prudent approach to risk management, ensuring financial stability amidst volatile market conditions.

Furthermore, the loan disbursement is strategically tied to future oil sales, with repayments structured to align with anticipated revenue streams.

This approach not only mitigates the risks associated with oil price volatility but also ensures a sustainable and manageable debt repayment process.

While the loan provides immediate liquidity and financial flexibility, Nigeria remains committed to implementing comprehensive economic reforms to drive long-term sustainable growth.

The government’s efforts to diversify the economy, enhance infrastructure development, and promote investment in key sectors will complement the benefits derived from the oil-backed loan, fostering inclusive economic development and prosperity for all Nigerians.

As Nigeria embarks on this transformative journey, the successful acquisition of the $1.05 billion oil-backed loan represents a pivotal milestone in the country’s economic recovery efforts. With prudent fiscal management and strategic resource utilization, Nigeria is poised to unlock its full economic potential and emerge stronger in the post-pandemic era.

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Nigeria in Talks with World Bank for $1bn Loans to Aid Displaced Persons and Rural Development



world bank - Investors King

In a bid to tackle the challenges confronting internally displaced persons (IDPs) and bolster rural development initiatives, the Nigerian government has entered negotiations with the World Bank for loans totaling $1 billion.

This financial infusion aims to address the pressing needs of IDPs and uplift rural communities across the nation.

The proposed loans, detailed in World Bank documents titled ‘Solutions for the Internally Displaced and Host Communities Project’ and ‘Rural Access and Agricultural Marketing Project – Scale Up,’ signify a concerted effort by the government to provide comprehensive support to vulnerable populations and enhance economic opportunities in rural areas.

With an allocation of $500 million earmarked for IDP assistance and an additional $550 million dedicated to rural access and agricultural marketing, these loans underscore the government’s commitment to fostering inclusive growth and resilience within communities grappling with displacement and economic challenges.

The World Bank’s involvement underscores the global community’s recognition of Nigeria’s efforts to address humanitarian crises and promote sustainable development.

The loans are poised to fund initiatives aimed at improving access to basic services, fostering social cohesion, and enhancing livelihood opportunities for IDPs and their host communities, particularly in conflict-affected regions of the country.

Furthermore, the infusion of funds into rural access and agricultural marketing endeavors is poised to unlock new pathways for economic growth, empower local farmers, and bridge the gap between rural communities and broader markets.

As negotiations progress, stakeholders anticipate transformative impacts that will propel Nigeria towards a more prosperous and inclusive future for all its citizens.

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



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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