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.
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.
Breakdown of 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.
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.
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.
“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.”
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.
Senate calls for the liberalization of cement policy to crash the price of the commodity
The Senate also tasked the FG on providing more industrial incentives to bring new players into the cement industry.
The Nigerian Senate has called for the liberalization of Nigeria’s cement policy to boost production and subsequently crash the price of the commodity in the country.
This motion was raised by Senator Lola Ashiru at today’s senate plenary, the senator also tasked the Federal Government on providing more industrial incentives to bring new players into the cement industry, in addition to the liberalization of the cement policy in Nigeria.
Ashiru explained that to reduce the price of cement and in extension, other building materials in the country, the Federal Government needs to provide an enabling operating environment that will encourage new entrants in the country.
The Senate in conclusion called on the FG to provide more industrial incentives and protections such as concessionary loans and larger tax incentives to encourage new entrants and expand the national cement production infrastructure, as this boost in production will lead to a downward review of cement price in Nigeria.
What industry leaders are saying
Earlier this year the founder of BUA Group, Abdulsamad Rabiu, called for the liberalization of Nigeria’s cement policy to boost production and reduce the price of the commodity.
The billionaire philanthropist faulted the belief that Nigeria is self-sufficient in terms of cement production, noting that recent statistics and figures on Nigeria’s population and cement production do not support this status of sufficiency in cement production as stated by some individuals.
He attributed the high price of cement products in the country to the supply gap which exists in the country, as the few producers who currently operate in the country are unable able to meet the country’s huge and growing demand.
The Group Executive Director, Strategy, Portfolio Development and Capital Projects, Devakumar Edwin, explained that the demand and consumption of cement in the nation currently outstrips supply, and this can be pegged on the growth in the country’s population, and the strong appetite for real estate investment and construction in the country.
He revealed that a supply gap of about 40% exists in the country’s cement market and that all players in the industry are working hard to level production with the rising demand in the country.
Paypal’s Venmo now permits cryptocurrency trading
Venmo will support four different cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
Venmo, a mobile payment service owned by PayPal has announced that it has started allowing users to buy, hold and sell cryptocurrencies on its app. Just like PayPal, Venmo will support four different cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, and users can carry out transactions with as little as $1 on the app
Founded in 2009, Venmo has over 70 million users and it is one of the most popular payment channels in the US. The payment platform processed around $159 billion in payments last year.
Since the app functions like a social network, adding cryptocurrency will offer a more user-friendly feel for people who love buying and selling crypto.
As bigger companies show more interest in cryptocurrency, there will be wider adoption of virtual currencies in future. Venmo is the latest payment app that is offering support for cryptocurrency on its platform.
Paypal, the parent company of Venmo is one of the most active companies in the crypto space as it allows users to buy, sell and hold cryptocurrencies in their digital wallets. Paypal users can also spend their coins at millions of merchants globally.
Crypto on Venmo is enabled through PayPal’s partnership with Paxos Trust Company, a regulated provider of cryptocurrency products and services.
What they are saying
Darrell Esch, Venmo’s Senior Vice President and general manager said “Our goal is to provide our customers with an easy-to-use platform that simplifies the process of buying and selling cryptocurrencies and demystifies some of the common questions and misconceptions that consumers may have.”
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- 2020 FY Results: Unity Bank Plc posts profit after tax of N2.09 billion.
- Guinea Insurance Plc reports a loss of N142.13 million in 9M 2020.
- Unilever Nigeria Plc set to hold Annual General Meeting on 6th of May.
- UBA Plc posts profit after tax of N38.16 billion in Q1 2021.
- PZ Cussons Nigeria Plc appoints Ifueko Okauru as Independent Non-Executive Director.