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Bismarck Rewane, NESG raise concern over Nigeria’s debt 

Bismarck Rewane and the Nigerian Economic Summit Group have countered the claim of Zainab Ahmad that Nigeria doesn’t have a debt problem.

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Bismarck Rewane, Nigerian Economic Summit Group raise concern over Nigeria’s debt 

Bismarck Rewane and the Nigerian Economic Summit Group have countered the claim of the Finance Minister, Zainab Ahmad, that Nigeria doesn’t have a debt problem.

Managing Director/Chief Executive Officer, Financial Derivatives Company, Rewane said the total public debt, which rose to N26.22 trillion as of September 2019 from N25.70 trillion in the same period of 2018, raises concern.

ECOWAS economy grows by 3.1%, expected to hit 3.3% by end of 2019 , Dangote Refinery would help save $10 billion in forex - FG,, FG monitoring ‘Eco’ adoption by ECOWAS members amidst threat to Naira, CBN, Economy: Will the FG tax reforms support revenues in 2020? , FG exempt tuition fees, basic food items and others from 7.5% VAT, Nigeria’s total debt stock rises to N26.14 trillion  

Mrs Ahmed Zainab

In its 2020 Macroeconomic Outlook, NESG stated that “Nigeria’s mounting debt profile is a major concern despite the country having about $900bn worth of dead capital in properties and agricultural lands (PwC Nigeria, 2019).”

How Nigeria’s debt stands: The National Bureau of Statistics (NBS) reported that the nation’s total debt rose from N25.70 trillion in March 2019 to N26.14 trillion by the end of September 2019. This means, quarter on quarter, Nigeria’s total debt stock rose by 1.71% or N440 billion.

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Breakdownof debt stock: Nigeria’s debt stock category for the third quarter of 2019 shows that the country’s total external debt is estimated at N8.27 trillion, constituting 31.55% of total debt for the Federal Government, States, and the FCT.

  • The total domestic debt rose to N17.94 trillion or 68.45% of total debt stock within the quarter.
  • The Federal Government’s domestic debt was put at N13.9 trillion, constituting FGN Bonds, FGN Savings Bonds, FGN Sukuk, Green Bond, Promissory Notes, Nigerian Treasury Bills and Bonds.
  • All the 36 states accrued domestic debt of N4.04 trillion as of the end of September 2019.

[READ MORE: Bismarck Rewane queries CBN and FG, says Nigerian economy in critical times)

A further look into the breakdown of debts accruable to states in Nigeria disclosed that states’ debt profile increased marginally by 1.9% within the last quarter.

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What Nigeria needs to do: According to the Economic Group, the properties with dead capital are the National Art Theatre, the National Stadia in Lagos and Abuja. The group also included Tafawa Balewa Square, Lagos, and the Federal Nursing Hospital, Ikoyi as the redundant assets that the government needs to commercialise or privatise in order to unlock finance and economic growth.

After the country’s debt had grown by 214.90% over the past six years, from N8.32 trillion in June 2013 to N26.2 trillion as of September 2019, a Financial Derivatives Company’s bi-monthly economic and business update disclosed that, “It is vital to employ proactive measures to reduce the current debt level.”

Constraint affecting economic growth: It was disclosed that certain constraints such as unproductive borrowing, exchange rate volatility, low-interest rate movements, inefficient loan utilisation, and poor debt management practices are negatively affecting the investment in Nigeria.

The group, which is a private sector-led think-tank said the significant borrowings had gone unnoticed and Nigeria needs infrastructure development to boost the economy.

“The ever-increasing government spending is yet to yield any notable results; poverty is on the rise and health and educational facilities remain inadequate amid the fast-growing population. Debt service has become a significant portion of the expected revenue in 2020. It accounted for over 60% of the government’s independent revenue in 2019.

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“The total debt has been increasing ($85.39bn) but total factor productivity growth has been declining (-0.4%). This implies that the FG borrowings are hardly used for productive purposes. The debt service, after a while, becomes a burden on the government and its fiscal balance.”

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Meanwhile, the group said for Nigeria to avoid “an unnecessary debt burden on future generations”, there’s a need for the government to intensify the effort of generating more revenue from alternative sources.

Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ). In the era of media convergence, Olalekan is a valuable asset, with ability to curate and broadcast news. His zeal to write was developed out of passion to shape people’s thought and opinion; serving as a guideline for their daily lives. Contact for tips: [email protected]

1 Comment

1 Comment

  1. Stanley

    February 4, 2020 at 7:53 am

    Corrupt Nigerian politicians and their allies in the civil service have always employed the use of debt instruments to access cheap money which they often failed to spend productively. Most of such funds have been spent on flimsy projects or programmes to score cheap political points, while a good portion has been embezzled. Even the huge funds that have been continuously channeled into boosting agricultural production for more than a decade now, have not returned expected levels of success and employment creation, hence the need to re-asses the current strategy. The Federal Govt appears to be overwhelmed by the current economic and social chaos in the country, which is why I think this economy needs to be restructured so that growth & development potential can be harnessed across all states simultaneously, allowing people to hold their state governors fully to account instead of the current situation in which everyone is pointing fingers at the Federal Govt. Many people don’t realize that those states with seemingly rich natural resources will most likely turn out to be the losers in a restructured economy in the long run, as they may not have the motivation to develop other industries & talents needed to advance their economies beyond the rent-seeking stage.

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Business

Breaking-#EndSARS: Lagos State imposes 24-hour curfew

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Social clubs, recreational centres to reopen August 14, Lagos International Trade Fair to get permanent site soon, Sanwo-Olu vows , Lagos State discloses road expansion plans in an effort to combat traffic, Lagos State cracking down on Uber, Bolt, Ocar a week after Okada, Keke Napep ban , LASG increases health workers’ allowances, commissions local production of face masks

The Lagos State Government has announced the imposition of a 24-hour curfew in the state with effect from 4 pm. Tuesday, October 20, 2020.

This is due to the raging #ENDSARS protests and demonstrations in the state which has been taken over by hoodlums and miscreants with attacks on innocent citizens and destruction of properties.

The announcement was made by the governor through a tweet post on his official Twitter handle on Tuesday, October 20, 2020.

He said: “As government who is alive to it’s the responsibility and has shown commitment to the #EndSars movement,we will not watch and allow anarchy in our state.

“I, therefore, declare a 24-hour curfew in the state starting from 4 pm today, nobody except emergency responders and essential service providers should be found on the streets.’’

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Details later…

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Business News

Geely Auto to invest 54 million dollars in the development of healthy cars

Geely’s leading track record will be taken to a new level with the development of an all-round “healthier car.”

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As Exclusive Partner of Geely Automotive in Nigeria, Mikano brings us great news of Geely Automotive innovative steps towards development of “healthy, intelligent vehicles” by earmarking 54 million Dollars of funding to it; as a furthering of the fight against Coronavirus.

The move not only adds a new dimension to Geely’s understanding of “passenger safety,” it also represents a new development direction for automobiles.

READ: Automotive Bill: Why FG may return it to National Assembly

The development of a “healthier car” differs from specialized medical vehicles in that Geely’s products are made for ordinary consumers. Cars with comprehensive virus protection not only require the capability to isolate harmful substances in the air, it also needs to quickly and effectively purify cabin air for occupants.

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Geely Auto’s global R&D and design networks based in Europe, USA and China will jointly move to develop and research new environmentally sustainable materials with anti-bacterial and anti-viral properties which can be used within air-conditioner systems and on frequently touched surfaces such as buttons and handles.

Geely Auto will make full use of its global R&D system and resources as well as cooperate with professional medical and scientific research institutions to set up special project teams to work on the new research.

READ: Cars45 CEO explains how to increase demand for Made in Nigeria cars

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An Conghui, President of Geely Holding Group and President and CEO of Geely Auto Group said “Epidemic prevention is a job that requires the long-term effort of wider society. As the most common mode of transportation, consumers spend a considerable amount time in their cars, akin to a “second home” Only by making healthier products can we meet consumer demand for better quality of life. Based on the automotive industry’s development direction built around electrified, connectivity, intelligence, and shared mobility, auto companies should commit to developing products that help protect the health of drivers and passengers. This will become one of Geely Auto key long-term development objectives.”

Earlier on January 28, Geely Holding Group joined hands with the Li Shufu Foundation to set up a special 30 million dollars fund in support of the new coronavirus prevention and control, with a focus on the mass purchasing of much needed medical supplies for China in the short term.

Geely’s leading track record will be taken to a new level with the development of an all-round “healthier car.” Geely’s move sets a new precedent in the development of safety technologies that goes beyond developing leading crash test results and moves into new dimensions of passenger safety.

Visit www.geely.ng to find out more about Geely Nigeria

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Exchange rate falls again at NAFEX window as #EndSARS protests escalates

The Naira depreciated against the dollar at the Investors and Exporters (I&E) window closing at N386/$1.

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Naira, Exchange rate falls across forex markets as dollar liquidity remains low

Nigeria’s exchange rate at the NAFEX window depreciated against the dollar to close at N386/$1 during intraday trading on Monday, October 19.

Also, the naira remained stable against the dollar, closing at N462/$1 at the parallel market on Monday, October 19, 2020, as the protest against the special anti-robbery unit (SARS) and police brutality by the Nigerian youth escalates with its impact on business activities across the country

READ: Naira falls again at black market as #EndSARS protest limits movement.

Parallel market: According to information from Abokifx, a prominent FX tracking website, at the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N462/$1 on Monday. This was the same rate that it exchanged for on Friday, October 16.

Current developments

  • The local currency had strengthened by about 7.8% within the one week in September at the black market, as the CBN introduced some measures targeted at exporters and importers, in order to try to boost the supply of dollars in the foreign exchange market, and reduce the high demand for forex by traders. The measure
  • The CBN has sold over $500 million to BDCs since they resumed forex sales on Monday, September 7, 2020. This was expected to inject more liquidity to the retail end of the foreign exchange market and discourage hoarding and speculation.
  • However, the exchange rate against the dollar has remained volatile after the initial gains made, following the CBN’s resumption of sales of dollars to the BDCs.
  • The President of the Association of Bureau De Change Operators, Aminu Gwadebe, said he expects the impact of the extra liquidity in the market to be gradual.
  • Despite the drop in speculative buying of foreign exchange, the huge demand backlog by manufacturers and foreign investors still puts pressure and creates a volatile situation in the foreign exchange market.

READ ALSO: Naira falls big across all forex market despite another $50 million allocation to BDCs

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NAFEX: The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N386/$1.

  • This represents a 17 kobo drop when compared with the N385.83/$1 that it exchanged for on Friday, October 16.
  • The opening indicative rate was N386 to a dollar on Monday. This represents a 38 kobo gain when compared to the N386.38 that was recorded on Friday.
  • The N392.30 to a dollar is the highest rate during intraday trading before closing at N386. It also sold for as low as N380/$1 during intraday trading.

READ: Why Airtel Nigeria credited subscribers with free airtime

Forex turnover: Forex turnover at the Investor and Exporters (I&E) window declined by 3.6% on Monday, October 16, 2020.

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  • According to the data tracked by Nairametrics from FMDQ, forex turnover dropped from $125.40 million on Friday, October 16, 2020, to $120.93 million on Monday, October 19, 2020.
  • The CBN is still struggling to clear the backlog of foreign exchange demand, especially by foreign investors wishing to repatriate back their funds.
  • The drop in forex supply after the huge increase 2 trading days ago reinforces the volatility of the foreign exchange market. The supply of dollars has been on a decline for months due to low oil prices and the absence of foreign capital inflow into the country.
  • As part of the measure to check forex abuse and check illegal transactions, the CBN last month directed the freezing of accounts of about 38 companies.
  • The average daily forex sale for last week was about $169.93 million, which represents a huge increase from the $34.5 million that was recorded the previous week.
  • Total forex trading at the NAFEX window in the month of August was about $857 million, compared to $937 million in July.
  • The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand and a shaky economy that has been hit by the coronavirus pandemic.
  • According to Reuters, currency traders said that the naira is expected to be stable this week as banks limit foreign exchange transactions by both firms and individual buyers on the unofficial black market to curb speculation.Explore Data on the Nairametrics Research Website

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