Debt servicing may constitute a major setback for the Nigerian economy in the year 2020, as the latest data obtained from the Central Bank of Nigeria revealed that Nigeria paid a whopping sum of $4.45 billion as external debt service in the first two months of 2020.
According to the data obtained from the CBN covering January and February 2020, the sum of $4.45 billion was paid Year-to-Date (YTD) in 2020 as external debt service, representing a 240% rise compared to the cumulative total debt service payment recorded in 2019.
Debt Service payment hits all-time high
In 2019, the CBN record showed that a total sum of $1.34 billion was paid as external debt service payment. Meanwhile, a closer look at the CBN data showed the sum of $125.4 million was recorded in January, while $4.43 billion in February 2020.
A closer look at the historical trend of external debt service showed that the $4.55 billion paid in February 2020 to service external debt represents the biggest single tranche of payment recorded in Nigerian debt history.
It should be noted that Nigeria is obligated to pay lump sum as external debt obligations to various world organizations like World Bank, African Development Bank, Exim Bank of China, Exim Bank of India and so on. Data from the Debt Management Office (DMO) shows that Nigeria paid over $134.3 million to the World Bank in just Q3 2019.
External debt rose by 616% in 14 years
External debt service continues to hit deep on Nigeria, and this is due to the rising external debt accumulation. Following the successful Paris Club debt deal and the exit from the London Club debts, Nigeria’s external debt stock dropped to US$3.54 billion in 2006. Fast forward to 2019, the country’s external debt rose to $26.94 billion, representing 616% rise in 14 years.
At the end of Q3 2019, data obtained from the DMO database showed that the country’s total debt stock stood at $85.39 billion. Since 2006, Successive government in Nigeria have approached both local and foreign debt market obtain loans to finance their operations.
In terms of GDP, the country’s debt to GDP ratio remains relative sustainable for now at c.18% based on latest DMO debt data, however, the cost of servicing the debt may further put Nigeria in difficult financial strain. In 2019, debt servicing gulped over 50% of the country’s total revenue.
Foreign Reserves extend free fall as revenue source plunge
The outlook for Nigeria’s revenue in 2020 faces a huge problem as the country’s main revenue source (Oil) currently trades at a twenty-year low of $28pb. It should be noted while the drop in oil price significantly affects Nigeria in terms of revenue, debt service obligations is paid regardless and this is sometimes moved from the foreign reserves.
In 2019 (YTD), the foreign reserves dropped by $2.36 billion, a decline that has been largely attributed to the continued fall in oil price due to global headwinds arising from Pandemic COVID 19 and oil price war between one of the two largest oil producers in the world.
What next for the Nigerian economy?
Bearing current realities of revenue crisis, the Nigerian government slashed the price of PMS (Petrol), a move targeted to easing off revenue decline pressure and controversial subsidy payment in the country.
The continued spread of pandemic COVID continue to dampen growth outlook world over, and Nigeria ranks top among countries suffering worst hit in terms of the trickledown effect.
The Group Managing Director, NNPC, Mele Kyari, recently disclosed that as a result of the coronavirus pandemic, Nigeria has about 50 cargoes of crude oil that have not found a landing and this implies that there are no off-takers for them for now due to the drop in demand.
Without mudslinging the current administration at the wheel, Nigeria cannot afford more external debt borrowing. Recall, that the CBN has just embarked on what was described as “exchange rate adjustment or unification”, by collapsing both inter-bank rate and Parallel markets, making them trade at the same rates. While the CBN has said this is not a devaluation, one thing obvious is that this is only an old while in a new bottle. That is, Naira has just been partially devalued.
What it means: With the partial devaluation of naira, it implies for every external debt service obligation Nigeria pays, it will cost more in terms of the dollar value, a luxury Nigeria can no longer afford.
FG to distribute 10 million LPG gas cylinders in 1 year
The FG is set to inject up to 10 million gas cylinders into the market to help improve safety and deepen cooking gas utilization.
The Federal Government has announced plans to inject 5 to 10 million Liquefied Petroleum Gas (LPG) cylinders into the market in the next one year.
This is to help improve safety and deepen LPG (otherwise known as cooking gas) utilization across the country.
This disclosure was made by the Programme Manager, National LPG Expansion Implementation Plan, Mr Dayo Adeshina, at a sensitisation workshop on LPG Adoption and Implementation for Industry Stakeholders, on Wednesday in Lagos.
According to a report from the News Agency of Nigeria (NAN), Adeshina said the National LPG Expansion Implementation Plan, domiciled in the Office of the Vice President, was committed to achieving Nigeria’s target of 5 million Metric Tonnes of LPG consumption annually by 2027.
What the Programme Manager for LPG Expansion Implementation Plan is saying
Adeshina said, “The Federal Government is working towards injecting five to 10 million cooking gas cylinders into the market within the next one year. We are starting the cylinder injection under the first phase in 11 pilot states and FCT, with two states from each of the geopolitical zones.
The states are Lagos, Ogun, Bauchi, Gombe, Katsina, Sokoto, Delta, Bayelsa, Ebonyi, Enugu, Niger and the Federal Capital Territory. The cylinders will be injected through the marketers. The marketers will be responsible for the cylinders and the exchange will take place in homes and not in filling stations.
What this means is that going forward, cylinders will not be owned by individuals but by the marketers who will ensure that they are safe for usage.’’
Adeshina pointed out that apart from household consumption, the government was trying to increase LPG usage in agriculture, transportation and manufacturing adding that this will enable the country to reduce CO2 emission by about 20% and create millions of jobs for Nigerians.
He said that the government had also granted waivers on importation of LPG equipment and removed Value Added Tax (VAT) on LPG in addition to investment in infrastructure.
The President of the Nigerian Liquefied Petroleum Gas Association, Mr Nuhu Yakubu, said efforts should be made to ensure the availability, accessibility and affordability of cooking gas in the country adding that this would encourage more Nigerians to embrace gas usage in their homes with the attendant benefits to the country.
Mr Olalere Odusote, Lagos State Commissioner for Energy and Mineral Resources, said the population of Lagos makes it imperative for residents to adopt cleaner energy sources for cooking, transportation and power generation adding that the government was targeting the conversion of 45% of about 4 million vehicles in the state to autogas over a four-year period in partnership with marketers.
What you should know
- It can be recalled that the Federal Government had in November 2020, announced plans for the conversion of cars to autogas in a bid to have cheaper and cleaner energy especially with the high cost of petrol.
- The government at different levels are pursuing cleaner energy sources for cooking, transportation and power generation.
JAMB bans use of email by candidates for UTME, DE registration
JAMB has announced that candidates for the UTME and Direct Entry will no longer be required to provide their email addresses at the point of registration.
The Joint Admission and Matriculation Board (JAMB) has announced that candidates for the Unified Tertiary Matriculation Examination (UTME) and Direct Entry will no longer be required to provide their email addresses at the point of registration.
The new adjustment is to protect candidates from various forms of manipulation and distortion of their personal details by some fraudulent cyber café operators.
The Registrar of JAMB, Prof. Is-haq Oloyede, who made the disclosure while addressing newsmen at the board’s headquarters on Wednesday in Bwari, Abuja, said the change, would take effect from Thursday, April 15, 2021.
What the JAMB Registrar is saying
Oloyede said, “They gain access to profiles of these candidates under the pretense of creating an email address for them. Then they change and block the candidates from receiving messages from the board. They also extort them after they change their passwords.
In view of this, the board has come up with adjustments to our operations. The first decision is that beginning from Thursday, April 15, candidates would no longer be required to provide any email address during registration from this year onwards.
It is by going to these cyber cafes to open emails that these candidates are open to abuse and stealing of their personal data,’’ he said.
He said that the board now had a mobile app that would allow candidates to deal directly with the board with their smartphones or via SMS to ‘55019’ code option.
The code option, he explained, would allow candidates to check admission status as well as all other verifications via SMS.
He said, “Printing of examination slips, results notification or raising tickets can be done anywhere by using candidates’ registration number only. However, at the close of registration every year, we would need the email addresses of the candidates so we can have access to as many of them as possible.
At the conclusion of registration, candidates are expected to send their email addresses through the mobile app or text message to the 55019 code twice, for validation. This is to update their profile with JAMB as the email will no longer be used as access to their profile, but rather as a communication tool with candidates.’’
While advising candidates to guard their phones with utmost care as it was the weapon for all transactions, Oloyede said that henceforth, all JAMB owned Computer-Based Tests (CBT) centres across the country, would only allow candidates with ATM cards into its centres.
He said that in order to cut down on the activities of fraudsters who hijack candidates to extort money from them, the centres would no longer allow candidates go outside the centres to pay for their e-pins and other cash transactions.
The JAMB Registrar said, “Only candidates with ATM cards will be allowed into all JAMB owned CBT centres, it can be that of their parents as long as they have the pin for the transaction.
“Those without ATM cards can go to other privately owned CBT centres where they can pay cash to register but we will not take cash or transact outside our centres.’’
What you should know
Meanwhile, in a related development, JAMB had said that the board lost over N10 million in 2020 to activities of fraudsters who penetrated their payment portal for ad-hoc staff.
The JAMB Registrar said that the money, which was meant to pay JAMB ad-hoc staff from the 2020 Unified Tertiary Matriculation Examination (UTME), was hijacked by the suspected fraudsters.
JAMB had a few days ago confirmed the commencement of registration for the 2021 UTME/DE examinations after the initial hiccup.
It stated that applicants must provide NIN at the point of registration with the registration by Direct Entry candidates to run concurrently with that of UTME candidates.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Tantalizers Plc reports a loss after tax of N422.05 million in FY 2020.
- NASD Plc announces admission of newly demutualized NGX shares.
- Lotus Halal Fixed Income announces dividend of N20 per unit for Q1 2021.
- Friesland Campina Wamco Nigeria Plc announces AGM, proposes dividend of N6.74 per share.
- ETI appoints Akin Dada as Group Executive, Corporate & Investment banking.