Report has it that the cost of servicing government debt in Nigeria is discouraging foreign investors from investing their money in the country.
Apparently, many investors are still willing to lend to the country despite the signs that their money might not be put into productive use.
Is Nigeria’s finance sector sustainable enough? Although there has been a worrying question among analyst over the proceeds of bond sales in Nigeria. This has led to questions over the sustainability of the country’s public finance sector.
According to Andrew Roche, Managing Partner at Paris-based financial consulting firm Finexem, Nigeria has borrowed quite a lot, with very little evidence as to where the money was spent.
He also expressed his worry over the Government using borrowed funds to patch up holes in budgets rather than investing in infrastructure or industry, as part of efforts to diversify the economy from a heavy dependence on oil.
He continued that Nigeria has been among the big beneficiaries of a global hunt for yield. The country sold its sixth Eurobond last November, raising $2.9bn in maturities of 7, 12, and 30 years in an issue that was more than three times oversubscribed.
On April 25, the Government raised N100 billion ($326m at the official rate) in an auction that included a debut 30-year local currency bond that was four times oversubscribed.
Roche said some investors might have overlooked some worrying metrics.
Nigeria’s debt is still equal to 19% of gross domestic product in 2018: The minister of Finance, Zainab Ahmed, stated during a presentation to investors in Washington last month that even though Nigeria’s debt has risen in recent years, it still equalled to just 19 percent of gross domestic product in 2018.
According to her, it is well below the average for emerging markets of just under 50 percent of GDP, according to the Institute of International Finance.
But the same presentation showed that even though the amount spent on servicing Government debt had fallen, share of the Government’s gross revenue collection had risen to an alarming two-thirds of revenues retained by the Federal Government after it distributed funds to the states, as mandated by Nigeria’s federal system.
An analyst at S&P Global Ratings, Ravi Bhatia, said the problem was best understood the other way round.
“The issue is not so much that interest payments are high. The main problem is that federal revenues as a share of GDP are just very low. They are literally reliant on oil and little else.”
Indeed, IMF data showed that Nigeria’s general government revenues were equal to just 5.7 percent of GDP last year, far below the average of 22 percent of GDP for the other 44 sub-Saharan countries for which the IMF collects data.
In its latest report on Nigeria published last month, the IMF also emphasised the need for “revenue-based consolidation” to lower the ratio of interest payments to revenue. The report went further to recommend that “non-oil revenue mobilisation” should be the top priority in “an urgent reform package.”
Why Okonjo-Iweala should win the WTO DG role – Prof. Moghalu
Professor Kingsley Moghalu has thrown support behind Dr. Ngozi Okonjo-Iweala to win the World Trade Organization top job.
A former Deputy Governor of the Central Bank of Nigeria, Professor Kingsley Moghalu, has publicly canvassed support for Dr. Ngozi Okonjo Iweala to win the World Trade Organization (WTO) top job.
The former professor of public policy at Fletcher School, Tufts University, made the disclosure via his official Twitter handle, as seen by Nairametrics
Prof. Moghalu made a strong case for why Africa’s candidate should be considered for the top shot, noting that the need for Africa to get a better deal in the world trading system should be a major criterion in selecting the next WTO DG. He also believed that correcting this negatively skewed trade deal will help tackle poverty and underdevelopment in Africa.
The dynamics of world trade are rigged against Africa, keeping the continent poor and undeveloped. In this piece for Project Syndicate @ProSyn I make a strong case for why Africa’s candidate, @NOIweala, should be selected as the next Director-general of @wto https://t.co/G4Fyxd1z91
— Kingsley Moghalu (@MoghaluKingsley) October 26, 2020
What you should know
Nairametrics had earlier reported that Nigeria’s Ngozi Okonjo-Iweala and South Korea’s Yoo Myung-hee have emerged as the last two candidates for the top WTO job.
Prof. Moghalu also disclosed that the final selection decision is expected this week or very early next week.
Prof. Moghalu said, “The dynamics of world trade are rigged against Africa, keeping the continent poor and undeveloped. In this piece for Project Syndicate @ProSyn, I make a strong case for why Africa’s candidate, @NOIweala, should be selected as the next Director-General of @wto.
“The final selection decision is expected this week or very early next. Alongside the case for why the African candidate Okonjo-Iweala is best placed to lead WTO, I make the case for the continent more broadly as to how and why it must get a better deal in the world trading system.”
What this means
If finally selected for the top job, the opportunity will present Dr. Okonjo the platform to solve some global trade-related issues, one of which is Africa’s trade position with the rest of the world.
Buhari in crucial meeting with Obasanjo, other former heads of state
President Buhari is presiding over a National Security Council meeting with some former heads of state and some security chiefs.
President Muhammadu Buhari is currently presiding over a National Security Council meeting with some former heads of state and some security chiefs.
Although the agenda of the meeting is not made public, issues bothering on the current security situation in the country are believed to top the agenda. This follows the outbreak of violence across the country during the protest against police brutality and extra-judicial killings, which has led to the loss of lives and destruction of public assets and private properties.
According to media reports, the meeting which is coordinated from the Council Chamber of the Presidential Villa, Abuja, has in virtual attendance General Yakubu Gowon (rtd.), former President Olusegun Obasanjo, Gen Abdulsalami Abubakar (rtd.), former President Goodluck Jonathan and former head of interim national government, Chief Ernest Shonekan.
Others who are physically present at the council chambers are Vice President Yemi Osinbajo; National Security Adviser, Major General Babagana Monguno (rtd.); Chief of Defence Staff, General Gabriel Olanisakin; Inspector-General of Police, Mohammed Adamu; Director-General, Department of State Services, Yusuf Bichi; and Director-General, National Intelligence Agency, Ahmed Rufai, among others are attending with the President.
This meeting is coming a day after President Buhari’s national broadcast on the security situation in the country calling for an end to the #EndSARS protests as their voices have been loudly heard.
Explore Data on the Nairametrics Research Website
Senatorial, State House of Assembly bye-elections postponed – INEC
Senatorial and State House of Assembly bye-elections slated to hold on October 31 in 11 states have been postponed by INEC.
The 6 Senatorial and 9 State House of Assembly bye-elections slated to hold on October 31 in 11 states of the Federation has been postponed by the Independent National Electoral Commission (INEC). The vacancies were as a result of death and resignation of previous members.
According to the statement issued by its National Commissioner & Chairman, Information and Voter Education, Festus Okoye Esq., INEC said the decision was taken after meeting with the 37 Resident Electoral Commissioners (RECs) on Thursday.
— INEC Nigeria (@inecnigeria) October 22, 2020
Though the commission did not categorically state the reason for the postponement, feelers are that it may not be unconnected with the raging #EndSARS protests across the nation.