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Nigeria borrows N754 billion in 3-month, total debt now N25.7 trillion  

Nigeria’s total debt stock rose to N27.7 trillion (US$83.8 billion) as of the end of June 2019.

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Nigeria’s total debt stock rose to N25.7 trillion (US$83.8 billion) as of the end of June 2019. This is contained in the latest report released by the Debt Management Office (DMO). This figure increases net borrowing to about N754 billion.

According to the latest report released by DMO, Nigeria’s total debt portfolio rose to N25.7 trillion as of June 30, 2019, compared to N24.9 trillion recorded in March 2019. That is, within three months, Nigeria increased its debt by N754.56 billion, representing a 3.2% increase.

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Debts Breakdown

Nigeria’s total debt stock constitutes both external and domestic debts. According to the latest DMO report, the country’s total external debt rose to N8.32 trillion ($27.1 billion), representing about 32.38% of the total debt stock. While the domestic debt constitutes 67.68%.

  • The breakdown of the total external debt showed that the federal government accounted for the biggest external debt stock in the country.
  • As at June 2019, out of the N8.32 trillion external debt, the Federal Government accounted for 7.01 trillion, while states and FCT accounted for only N1.30 trillion. This means the Federal Government accounts for 84% of Nigeria’s total external debt.
  • Also, the Federal Government (FG) accounts for the biggest domestic debt in the country. Specifically, out of Nigeria’s total N13.4 trillion domestic debt, FG accounted for N13.4 trillion, while states and FCT’s domestic debt stood at N3.9 trillion.
  • Overall, out of Nigeria’s N25.7 trillion debt stock, debt accruing to FG stood at N20.4 trillion (79%), while that of states and FCT stood at N5.27 trillion (20.5%).

The Rising Cost

While Nigeria’s debt profile hit a new height in the second quarter of 2019 (thanks to the federal government) the cost of servicing the debt hits just another height. In recent times, there have rising concerns over Nigeria’s debt service.

Experts have stated that while the country’s debt to GDP ratio may be sustainable in the meantime, the cost of servicing the debt eats deep into the country’s already depleting revenue.

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  • According to the DMO’s report, Nigeria paid a total of $252.2 million or N77 billion to service the country’s external debt between April and June 2019, while N189.8 billion was paid to service domestic debt.
  • This means Nigeria paid a total sum of N267.1 billion to service the country’s debt stock in just three months.
  • The breakdown shows that for the external debt, the World Bank’s debt servicing gulped almost $100 million within the period.
  • On the domestic front, interest paid on FG green bond was estimated at N718.5 billion with the period. Other instruments that gulped debt servicing in the domestic fronts include FG bonds (N128.9 billion), Treasury bonds (N6.25 billion) and FG Sukuk (7.84 billion).

More debt on the horizon

On Tuesday, October 8, 2019, President Muhammadu Buhari presented to a joint session of the National Assembly the details of the budget which is named, ‘Budget of Sustaining Growth and Job Creation.’

Specifically, the aggregate expenditure for the 2020 Budget is now N10.33 trillion. While experts have weighed in to criticize the budget for lacking wits, characterized with recycled elements and unrealistic targets, the budget proposal showed debt services would gulp another N2.45 trillion.

According to the Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, the sum of N1.7 trillion will be borrowed to finance the 2020 budget. As earlier published on Nairametrics, Nigeria has already approached the World Bank for another loan to the tune of $2.5 or N767.3 billion in a new tranche of concessionary lending.

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Experts have raised concerns over financing the budget by borrowing. Following the budget presentation, the Lagos Chamber of Commerce & Industry (LCCI) recently stated that from the total budget size of N10.3 trillion, having a recurrent component of N4.88tn and debt service of N2.45 trillion means there was not much left for infrastructure development.

[READ ALSO: Expert says Federal Government can make $280 billion from iron ore every year]

According to the Director-General of LCCI, Muda Yusuf, “Debt service commitment and recurrent spending are beginning to crowd out capital expenditure. This scenario is not in alignment with the aspiration to build infrastructure and a competitive economy. Debt service of N2.46 trillion is more than the capital budget of N2.14 trillion.”

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Also commenting on the 2020 budget, the head of Tax and Regulatory Services at PricewaterhouseCoopers (PwC), Taiwo Oyedele, stated that revenue would be a challenge to achieve 2020 budget due to the rising debt burden.

It is crystal clear that the government faces a huge fiscal revenue quagmire, and it is in this context that the FG’s proposed 7.5% Value Added Tax (VAT) increase was incorporated in the 2020 budget.

Patricia

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Economy & Politics

Over 20% of N-Power beneficiaries are now business owners – FG

The Minister emphasized the President’s vision of lifting 100 million Nigerians out of poverty.

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The Minister of Humanitarian Affairs, Disaster Management and Social Development, Sadiya Umar Farouq, has said that about 109,823 beneficiaries of the N-Power programme now have their own businesses.

This represents about 22% of the 500,000 Nigerians that have benefited from this programme since its inception.

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This was disclosed in a statement by the Minister’s Special Assistant on Strategic Communications, Mrs Halima Oyelade on Saturday, July 4, 2020. She said that the beneficiaries of Batch A and B of N-Power have established businesses in their communities.

The Minister in the statement said, “Statistics like this gives me joy and once again, I want to say congratulations; I look forward to hearing amazing testimonies and meeting beneficiaries of this programme who will be doing great things in the future”.

She emphasized President Muhammadu Buhari’s vision of lifting 100 million Nigerians out of poverty in the next 10 years by creating opportunities that would improve the productivity of Nigerian youths for entrepreneurship or employment.

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Going further the minister said, “Thus, the need to find ways to engage them is of utmost importance. However, the commencement of the enrolment of Batch C was predicated on the need to give more Nigerian youths the opportunity to benefit. This is because, keeping only 500,000 beneficiaries for four years defeats the purpose of Mr President’s vision, hence the need to scale up and was in no way meant to be punitive.”

While acknowledging the beneficiaries’ contributions, Farouq said, ‘’You are our model N-Power beneficiaries. Please avail yourselves of all opportunities provided by government like interest-free loans and leverage on those opportunities while using N-Power as a stepping stone”.

The minister said the ministry is working at resolving some of the challenges facing the programme which include delays in the payment of stipends, beneficiaries not showing up at their places of primary assignments and people accessing the programme while gainfully employed elsewhere.

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The minister also assured beneficiaries that outstanding payments would be made and transition plans were ongoing and would be duly communicated to them on their platform.

Some of the beneficiaries of the programme gave good testimonies about the impact of the programme in their lives and all expressed their gratitude to the Federal Government for the opportunity.

Nairametrics has reported the opening of application portal for batch C of the programme with effect from 11.45 pm on June 26, 2020. There have been over 3 million applicants that have shown interest in batch C of the programme in about a week.

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Patricia
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Corporate Press Releases

Meristem features Nike Okundaye in Campaign titled “The Journey”, highlights the importance for partners

Meristem taps into Okundaye’s creative energy, highlighting the shared story of growth and collaboration.

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It has been a long journey for financial services provider, Meristem Nigeria, having started out as a boutique stockbroking firm over 16 years ago and morphing into a capital market conglomerate offering an array of diversified service and product offerings. The tale is similar for the art and culture doyen, Nike Okundaye-Davies whose humble beginning in traditional weaving and dying practice annealed her to the art world and art lovers.

At a graceful age of 70, she has achieved over 102 solo art exhibitions, 36 group art exhibitions, a permanent display of two of her works in the Smithsonian National Museum of African Art, a Harvard recognition and many other global acclaims. With four (4) art galleries spread across the country, and the Lagos center being the biggest art gallery in West Africa, she once told a Forbes journalist that her dreams are driven by careful financial planning as she reinvests at least two-thirds of her income in her business and art centers.

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Meristem taps into her creative energy in this campaign, highlighting the shared story of growth and collaboration for both institutions, and the need to onboard the right partners to achieve long term financial goals and investment security.

Meristem, a capital market conglomerate and diversified financial services provider offering stockbroking, wealth management, asset management, trustee services and financial advisory. Over the past 16 years, Meristem has been consistent in value creation and innovation within the capital market space. The Nigerian stock exchange awarded Meristem as the best digital broker of the year. In 2018 also, Meristem became the first Nigerian asset management firm to attain compliance with the Global Investment Performance Standards (GIPS) by the CFA Institute. In 2017, Meristem handled the single largest trade in the history of the Nigerian Stock Exchange.

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Patricia
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Around the World

Shell considers relocating its headquarters to the UK

Royal Dutch Shell has consistently pushed for the Dutch Government to stop taxes on dividends.

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GLOBAL GAS vs SHELL: COURT SETS ASIDE AWARD OVER BREACH OF CONTRACT, Investors, shareholders shocked as Shell reduces dividend

Oil and gas giant, the Royal Dutch Shell, is considering moving its corporate headquarters from The Netherlands to Britain. This could be a move against the implementation of dividend tax in The Netherlands.

The move was disclosed by the oil company’s Chief Executive Officer, Ben Van Beurden, during an interview with a Dutch newspaper on Saturday, July 4, 2020. According to him, the oil giant is not ruling out relocating its headquarters from the Netherlands to Britain. He said:

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You always need to keep thinking. Nothing is permanent and of course we will look at the business climate. But moving your headquarters is not a trivial measure. You cannot think too lightly about that.”

Further confirming the Chief Executive Officer’s comment, a Shell spokesman told Reuters that the oil giant is looking at ways to simplify its dual structure, as it had been doing for many years.

Royal Dutch Shell has consistently pushed for the Dutch Government to stop the tax on dividend paid to shareholders, as this makes financing dividend, share buy-backs and acquisition a lot more difficult.

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An earlier attempt by the Dutch Government to stop the dividend tax as an incentive to convince Unilever to unify its dual structure in Rotterdam, was met with an outcry by the public, who see that as a gift to rich foreigners.

It can be recalled that Shell had announced a few days ago that it might likely write down between $15 billion-$22 billion in post impairment charges for the second quarter of 2020. The impairment, which is its largest since the merger with Shell Transport and Trading Company Ltd in 2005, shows the huge adverse impact that the coronavirus pandemic has had on the oil giant’s businesses.

Also, in a move that shocked investors, Shell for the first time since the Second World War, cut down the dividend that it paid to its shareholders by two-thirds due to the negative impact of the pandemic. The decision came as a surprise to many including shareholders of the oil company which is by far the biggest payer of dividend in the FTSE 100.

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Patricia
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