Business

Nigeria’s Public Debt Climbs by N2.04trn in Q1 to N41.6trn

Published

2 years ago

June 9, 2022

By Derrick Bangura

Nigeria’s total public debt stock, comprising the debt obligations of the federal government, states and the Federal Capital Territory (FCT) rose from N39.56 trillion in December 2021 to N41.60 trillion ($100.07 billion) in the first three months of 2022 (January to March), the Debt Management Office (DMO) revealed on Wednesday.

In addition, the domestic debt service obligations of the federal government stood at N668,685, 710,112.98 in the first three months of 2022.

According to the DMO, with the increase in the country’s debt profile, its total public debt-to-gross domestic product (GDP) now stands at 23.27 per cent, as against 22.43 per cent December 31, 2021.

The DMO, in a statement posted on its website explained: “The amount represented the domestic and external debt stocks of the Federal Government of Nigeria, the 36 state governments and the Federal Capital Territory. The comparative figures for December 31, 2021, were N39.56 trillion or $95.78 billion.”

The total public debt stock, the agency said, included new domestic borrowing by the FGN to partly finance the deficit in the 2022 Appropriation Act, the $1.25 billion Eurobond issued in March 2022 and disbursements by multilateral and bilateral lenders.

According to data posted by the DMO, the federal government’s total domestic debt as at March 31, 2022, stood at N20.144 trillion (N20,144,027,724,703).

In the same vein, the federal government’s domestic debt service of N668,685 billion for the review period was for Nigerian Treasury Bills (NTBs), Federal Government Bonds, FGN Savings Bond, and FGN Sukuk Rentals.

A breakdown of the debt service obligations showed that N188,364,772,069.17 was paid out in January, N103,883,183,876.20 in February and N376,437,754,167.61 in March.

Federal government bonds accounted for the lion share of N630,535,774,886.21 followed by NTBs with N29,642,197,193.31 and FGN Sukuk Rentals N8,167, 315,066.60. Similarly, FGN Savings Bond took the rear with N340,422,964.8 million. Total debt service for NTBs in January was N3,220,890,038.78, while February and March were N7,23, 906,633.90 and N19, 189,400,520.63.

For Federal Government Bonds, a total debt service of N185,026,886,879.94 was paid in

January, N96,527,951,065.07 in February, and N348,980,936,941.20 in March. Also, the DMO data showed that FGN Savings Bond gulped debt service of N116,995,150.45 in January, N123, 326,177.23 in February and N100,101, 637.18.

There was no debt service pay out for FGN Sukuk Rentals in January and February, but in March, a total of N8,167, 315,066.60 was paid.

Meanwhile, Nigeria’s external debt stock as at March 31, 2022 stood at $39,969.19 billion.

This comprised debts for multilateral and bilateral creditors as well as commercial loans.

Nigeria owes the largest chunk of $18,957.22 billion to multilateral creditors, including the World Bank Group, International Monetary Fund (IMF), African Development Bank, European Development Fund Arab Bank for Economic Development in Africa, Islamic Development Bank, and the International Fund for Agricultural Development (IFAD).

Out of the $18,957.22 billion owed multilateral agencies, $12,229.43 billion and $486.10 million respectively to the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD)- two members of the World Bank Group.

It is also indebted to the International Monetary Fund (IMF) to the tune of $3,395.08 billion and $4 495.87 billion to bilateral creditors, including China Exim Bank $3,667.65 billion), Agency Francaise Development of France ($567.89 million) and KfW of Germany ($164.04 million), among others.

Nigeria’s second external debt obligation were commercial loans, standing in excess of $15.918 billion. This included Eurobonds and Diaspora Bond.

Meanwhile, the World Bank Group has slashed its global growth forecast to 2.9 per cent for 2022, 1.2 percentage points lower than the 4.1 per cent it had predicted in January.

In its latest Global Economic Prospects report, the bank warned that the world economy could slip into a period of stagflation reminiscent of the 1970s.

According to the report, against the challenging backdrop of higher inflation, weaker growth, tighter financial conditions, and limited fiscal policy space, governments across the world would need to reprioritise spending toward targeted relief for vulnerable populations.

Stagflation occurs when there is a steep rise in inflation rate, slow economic growth rate, and unemployment remains steadily high.

The June Global Economic Prospects predicted growth in Sub-Saharan Africa to moderate to 3.7 per cent in 2022 and rise to 3.8 per cent in 2023.

The report noted that the Russia-Ukraine war was compounding the damage from the COVID-19, leading to higher inflation and tighter financial conditions.

“The Russian invasion of Ukraine has magnified the slowdown in the global economy, which is entering what could become a protracted period of feeble growth and elevated inflation.

“This raises the risk of stagflation, with potentially harmful consequences for middle- and low-income economies alike.

“Global growth is expected to slump from 5.7 per cent in 2021 to 2.9 per cent in 2022— significantly lower than 4.1 per cent that was anticipated in January.

“It is expected to hover around that pace over 2023-24, as the war in Ukraine disrupts activity, investment, and trade in the near term, pent-up demand fades, and fiscal and monetary policy accommodation is withdrawn,” the report stated.

As a result of the damage from the pandemic and the war, it stressed that the level of per capita income in developing economies this year would be nearly five per cent below its pre-pandemic trend.

Commenting, the World Bank President, David Malpass said: “The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hammering growth. For many countries, recession will be hard to avoid.

“Markets look forward, so it is urgent to encourage production and avoid trade restrictions. Changes in fiscal, monetary, climate and debt policy are needed to counter capital misallocation and inequality.”

The June Global Economic Prospects report offers the first systematic assessment of how current global economic conditions compare with the stagflation of the 1970s — with a particular emphasis on how stagflation could affect emerging market and developing economies.

The report observed that recovery from the stagflation of the 1970s required steep increases in interest rates in major advanced economies, which played a prominent role in triggering a string of financial crises in emerging market and developing economies.

According to the Director of the World Bank’s Prospects Group, Ayhan Kose, “Developing economies will have to balance the need to ensure fiscal sustainability with the need to mitigate the effects of today’s overlapping crises on their poorest citizens.

“Communicating monetary policy decisions clearly, leveraging credible monetary policy frameworks, and protecting central bank independence can effectively anchor inflation expectations and reduce the amount of policy tightening required to achieve the desired effects on inflation and activity.”

The report noted that current global economic situation resembles the 1970s in three key aspects: persistent supply-side disturbances fueling inflation, preceded by a protracted period of highly accommodative monetary policy in major advanced economies, prospects for weakening growth, and vulnerabilities that emerging market and developing economies face with respect to the monetary policy tightening that would be needed to rein in inflation.

However, it pointed out that the ongoing episode also differs from the 1970s in multiple dimensions: the dollar is strong, a sharp contrast with its severe weakness in the 1970s; the percentage increases in commodity prices are smaller; and the balance sheets of major financial institutions are generally strong.

It added that more important was that, unlike the 1970s, central banks in advanced economies and many developing economies now have clear mandates for price stability, and had over the past three decades, established a credible track record of achieving their inflation targets.

The report projected that global inflation was expected to moderate next year, but would likely remain above inflation targets in many economies.

It stressed that if inflation remained elevated, a repeat of the resolution of the earlier stagflation episode could translate into a sharp global downturn along with financial crises in some emerging market and developing economies.

The report also offered fresh insights on how the Russia-Ukraine war’s effects on energy markets are clouding the global growth outlook.

It said: “The war in Ukraine has led to a surge in prices across a wide range of energy-related commodities. Higher energy prices will lower real incomes, raise production costs, tighten financial conditions, and constrain macroeconomic policy especially in energy-importing countries.

“Growth in advanced economies is projected to sharply decelerate from 5.1 percent in 2021 to 2.6 per cent in 2022—1.2 percentage point below projections in January. “Growth is expected to further moderate to 2.2 percent in 2023, largely reflecting the further unwinding of the fiscal and monetary policy support provided during the pandemic.

“Among emerging market and developing economies (EMDES), growth is also projected to fall from 6.6 per cent in 2021 to 3.4 percent in 2022—well below the annual average of 4.8 per cent over 2011-2019.

“Also, the negative spillovers from the war will more than offset any near-term boost to some commodity exporters from higher energy prices, the report said, adding that

forecasts for 2022 growth have been revised down in nearly 70 per cent of EMDEs, including most commodity importing countries as well as four-fifths of low-income countries,” it added.

The report highlighted the need for decisive global and national policy action to avert the worst consequences of the war in Ukraine for the global economy. This, it stated would involve global efforts to limit the harm to those affected by the war, to cushion the blow from surging oil and food prices, to speed up debt relief, and to expand vaccinations in low-income countries.

It would also involve vigorous supply responses at the national level while keeping global commodity markets functioning well.

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Business

Businesses count losses amid power outage in Bauchi, Gombe, and Jigawa

Published

4 weeks ago

October 28, 2024

Matthew Eloyi

Business owners in Bauchi, Gombe and Jigawa are recording losses due to week-long blackout ocassioned by vandalism of the power transmission line in parts of northern Nigeria.

The sudden disruption in electricity supply in the past days, also affected essential services such as water, sanitation, street lighting and healthcare delivery as most hospitals have been operating without light.

Some of the affected businesses including shop keepers, millers and artisans, who spoke while reacting to a survey by the News Agency of Nigeria (NAN), described the situation as “pathetic”.

The survey examined the perennial collapse of national grid and the need for alternative power supply in the country.

Rice millers in Gombe had decried the impact of the erratic power supply on their businesses.

A Miller, Musa Arab, at Nassarawo Industrial Layout in Gombe, said the trend was crippling their operations as they relied on electricity supply from the grid to process paddy.

He said the mills were not operational power outage as they could not afford exorbitant pump prices of petrol or diesel to run their machines.

This, he said, reduced the volume of rice supply to the market and posed serious challenge to food security.

“We must invest in power because it is the biggest determining factor for industries to thrive.

“I have over 20 workers in my mill, and we have 100 mini rice mills here, so you can imagine those who have no jobs for the past 10 days.

“Government must go tough on those responsible for the perennial grid collapse because some persons may be benefitting from it,” he said.

Also, Yusuf Ibrahim said the situation might trigger the already fragile inflation, as prices of local varieties would shot up ocassioned by the diminish supply.

He said that some had jerked up their charges to cover the expenses on diesel thereby affecting rice prices.

A check by NAN at the Gombe Main market showed that a 100 kilogramme of rice was sold for between N120,000 and N160,000, as against N110,000 and N150,000, before the blackout.

Mr Usman Sani, a rice dealer, attributed the hike in price to low supply of the produce to the market in spite of the number harvest recorded this cropping season.

He said the prices had decreased slightly at the onset of the harvest, however, it showed sprawling increase due to power outage.

“The price of rice is already dropping as a result of harvest but the trend reverse since the blackout in the past days “ he said.

Ugochukwu Daniel, a bartender in Bauchi, decried the epileptic power supply in the country, adding that lack of durable energy supply would retard Nigeria’s quest to attain social and economic greatness.

Daniel said that she spent much on fuel to run power generator for refrigrator and lightening the beer parlour, to enable her to keep the business running.

He said that businesses could only thrive in an enabling environment with stable electricity supply, to enhance wealth creation and reduce poverty among Nigerians.

“My trade is about chill drinks and it survives on electricity to operate otherwise you will out of bussiness.

“Without electricity there is nothing you can do, and not only business but about everything. We depend on it,” he said.

Similarly, Samuel Adamu, said the persistent power outage had forced him to patronised charcoal for ironing clothes in spite of its high cost and cumbersome processes.

He said that most cleaners in the area had resorted to fabricated iron charcoal in spite of hike in its prices which suddenly jumped from N5,000 to N15,000.

Adamu said the situation also encouraged division of labour in laundry to cut cost and make some gains.

“Presently, I do wash the cloth, and engage someone for ironing. The charge is N300 per set as against N150”.

While advocated development of renewable energies to enhance power supply in the country, Adamu urged security agencies to entensify efforts towards electrical installations in the country.

In the same vein; Mr Muhammad Adamu, Chairman, Jigawa State House Assembly Commitee on Power and Energy, said the Jigawa Electricity Law 2024, made sound provisions to improve power generation and distribution in the state.

This, he said, was an offshoot of the devaluation brought about by the 5th alteration of the constitution, where removed power from the executive legislative list and to the concurrent list.

“It empowered the state houses of assembly to enact laws on power.

“The committee has also carefully pursued the bill and reviewed its structure and the promise it holds for the state power sector, infrastructure and the overall economy of the state.

“The new law will pave way for the establishment of Jigawa Electricity Commission, to regulate the state’s electricity market,” he said.

According to Adamu, the law will protect residents and investors in the energy sector through ensuring prepaid meter installation and possibility of recouping investor’s funds as well as address vandalism.

“The law will lead to provision of reliable, affordable and sustainable power, essential for development of all sectors of the economy, particularly in rural areas,” Adamu said.

“Vandalism will be over because we pay Kano Electricity Distribution Company (KEDCO) money for powered supplies, but whenever there is problem of damages or broken down transformers, it is either the communities or individuals that pay for the repairs”.

Business

Mercedes urges delay of EU tariffs on Chinese electric vehicles

Published

1 month ago

October 21, 2024

Matthew Eloyi

Mercedes urges delay of EU tariffs on Chinese electric vehicles

The head of German luxury carmaker Mercedes-Benz, has called for the European Union to de-escalate the dispute with China over tariffs on electric cars.

“We need more free trade instead of new trade barriers.

“That is why it is important to find a solution that suits both the EU and China,” chief executive Ola Källenius told the Monday edition of Bild newspaper.

“The negotiations for this take time. In order not to jeopardise them, the EU should postpone the enforcement of the planned tariffs,’’ he said.

At the start of the month, a majority of EU countries paved the way for additional tariffs of up to 35.3 per cent on battery-powered electric vehicles imported from China.

Germany, however, voted against the measure amid concerns over retaliatory actions which could hurt the country’s giant car industry.

The European Commission had pressed for extra tariffs after an investigation accused Beijing of subsidising domestic electric car manufacturers, and thus distorting the market in the EU.

But whether the import tariffs would actually come into force at the beginning of November is still up to the commission.

The plans can still be dismissed if Brussels reaches a solution with China at the negotiating table.

Business

ACCI moves to promote business connections, balance work-life

Published

1 month ago

October 16, 2024

Matthew Eloyi

ACCI moves to promote business connections, balance work-life

The Abuja Chamber of Commerce and Industry (ACCI), is taking innovative steps to enhance professional relationships and promote a healthy work-life balance.

The President of ACCI, Dr Emeka Obegolu, said this in a statement on Tuesday in Abuja.

Obegolu said ACCI was committed to creating environments where professionals could connect beyond the confines of traditional boardrooms.

He said the upcoming “Business Meets Golf’’ Tournament epitomises this vision.

“Scheduled for Oct. 18 to Oct 19 at the IBB Golf Club, the tournament will gather industry leaders, top executives, and key decision-makers for a unique networking experience.

“This two-day event aims not only to strengthen business ties but also to foster partnerships that can drive economic growth.

“The ACCI’s initiative reistates the importance of maintaining a balance between professional achievement and personal well-being.

“By encouraging corporate cultures that prioritise relaxation and self-care, the Chamber acknowledges that such balance is vital for productivity and overall success,” he said.

According to Obegolu, the event will feature a range of activities designed to facilitate both business engagement and relaxation.

“Highlights include a Business-to-Business (B2B) cocktail on the first day, followed by the golf tournament and additional networking opportunities on the second day.

“The tournament will culminate in an awards ceremony recognising outstanding golfers among the participants.

“‘Business Meets Golf’ exemplifies our dedication to fostering innovative networking opportunities.

“We aim to create spaces for meaningful discussions that can lead to impactful collaborations,” Obegolu said.

The ACCI boss said in addition to promoting business connectivity, the council aimed to restate the importance of relaxation and a balanced lifestyle.

Obegolu said through events like this, the Chamber continued to play a pivotal role in supporting trade and industry in Nigeria while driving sustainable growth within the private sector.

He said to raise awareness about this landmark event, ACCI was partnering with the News Agency of Nigeria (NAN) and Media Trust Limited, to ensure broad visibility and engagement from leading brands.