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Nigeria records debt service to revenue ratio of 99% in first quarter of 2020.

This suggests almost all the revenue generated was used to meet debt service obligations.  



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The rising cost of Nigeria’s debt profile breached a new milestone with the country’s debt service as a percentage of revenue rising to 99% in the first quarter of 2020. This is contained  in the Medium-Term Expenditure Framework and Fiscal Strategy (MTEF/FSP) report recently released by the Federal Ministry of Finance, Budget, and National Planning 

A cursory review of the data obtained from the MTEF/FSP report shows that in Q1 2020, Nigeria incurred a total sum of N943.12 billion in debt service while the federal government retained revenue was put at N950.56 billion. This implies Nigeria’s debt service to revenue is estimated to be 99% during the period.  

This is the highest on record and it suggests almost all the revenue generated from both oil and non-oil sources was used to meet debt service obligations.  

Debt service, recurrent expenditure, and Revenue Breakdown  

Nigeria like the rest of the world has been battling with the COVID-19 pandemic and was expected to suffer a significant revenue shortfall. However, the data suggests the government may have experienced a significant drop in revenues before the lockdown induced economic downturn indicating that things may indeed be worse than projected.  

According to the data, the country earned N950.5 billion in revenue compared to a prorated budget of N1.9 trillion representing a whopping shortfall of 52%.  Oil revenue was N464 million representing a shortfall of 30% when compared to budget while non-oil revenue was N269 billion representing a shortfall of 40%. 


READ ALSO: Nigeria’s fiscal quandry: A revenue problem or a debt problem?

Source: MTEF Framework2020-2022.

Despite the revenue shortfalls recorded, government recurrent expenditure (debt and non-debt) remained in line with budgetary expectations. According to the data, debt service for the first quarter of the year rose to N943.1 billion divided into domestic debt (N594.23 billion), Foreign Debt (N129.51), and Interest on Ways and Means (219.38 billion) respectively.   

Recurrent non-debt expenditure was N1.1 trillion, largely in line with budget expectations a common feature over the last two decades. However,  capital expenditure was N139.7 billion, a whopping 71.3% off target as much needed capital expenditure suffered yet another decline.

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Is Nigeria “Bankrupt”? 

The continued depletion in Nigeria’s revenue continues to raise questions around the solvency of the Nigerian economy. Generally, debt sustainability can be explained using either debt to GDP or debt service to revenue ratio.  

With Nigeria’s total public debt below 30% of GDP, the country’s debt burden appears to be relatively light compared with many other countries. Meanwhile, debt-to-GDP is not regarded as the best indicator of debt sustainability, especially in a country where tax-to-GDP is low. For Nigeria, a better indicator of debt sustainability is the debt service-to-revenue ratio, which in Nigeria has in recent years risen to worrying levels, and now 99% as at Q1 2020 

In 2019, former CBN Governor, Sanusi Lamido, declared that Nigeria is “bankrupt and the country is heading to bankruptcy”. This statement credited to the former Emir of Kano State just after the African Development Bank (AfBD) revealed that Nigeria spends more than 50% of its revenue on debt servicing, and this is worrisome.  

READ: Evidence that Sanusi is right about Nigeria ‘going bankrupt’ 

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Gloomy Outlook

With the economy likely on the path to a recession, government revenues particularly non-oil revenues could remain depressed this quarter and the next. This means the government will still need to rely on debt borrowing to fund its operations. Just recently, the national assembly approved another $5.5 billion in debt borrowing for the Federal Government piling more pressure on Nigeria’s debt service to revenue ratio.

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Though the latest rise in crude oil prices presents a silver lining, Nigeria still faces a cut in its crude oil output and will earn less oil revenue than was projected. The government has also cut its crude oil benchmark as contained in the MTEF.

“Crude oil production volume has been revised downwards from the 2.18 million barrels per day (mbpd) in the 2020 Budget to 1.9 mbpd (out of which 400kbpd is condensate). This reflects recent oil output cut by the OPEC and its allies to stabilize the world oil market. which put Nigeria’s quota at 1.48mbpd, excluding condensates. Oil production averaged 2.1mbpd in the first two months of the year before the collapse in demand and price as most economies went into lockdown.

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READ ALSO: LCCI condemns Senate over Buhari’s $22.7 billion loan approval

Crude oil producers are experiencing great difficulty in selling crude cargoes, resulting in heavy price discounting to attract buyers. Nevertheless, the lower production volume has enabled the NNPC to shut in some very high cost oil wells, and hence lowered the average production cost, from about US$33 to under US$28 per barrel.” MTEF

These challenges also suggest the government may have to rely on funding from the CBN to meet its revenue shortfalls. The government has in the past relied on the CBN Ways and Means to fund recurrent expenditure as it repays with future oil inflows.

The Bottomline: Revenue outlook still muted  

According to the Joint World Bank-IMF Debt Sustainability Framework for Low-Income Countries released in 2020, a country’s debt service to revenue threshold should not exceed 23%. 

Meanwhile, Nigeria currently stays around 99%. This implies out of every 100 Naira that Nigerian earned in Q1 2020, 99 Naira was spent on servicing debts. 

This is an unsustainable model for Nigeria and cannot continue for too long. At some point, the government will have to increase its revenues or face further spending cuts.








Nairametrics Research team tracks, collates, maintains and manages a rich database of macro-economic and micro-economic data from Nigeria and Africa. Our analysts share some of the data collated on Nairametrics, using formats such as docs, tables and charts etc. The team also publishes research based analysis as articles on a regular basis.

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Economy & Politics

Okonjo-Iweala speaks on Twitter’s suspension of Donald Trump

Dr Ngozi Okonjo-Iweala has given her opinion on Twitter’s suspension of US President, Donald Trump.



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Twitter board member and candidate for the DG of the WTO, Ngozi Okonjo-Iweala, has said Twitter has rules under which it operates and CEO Jack Dorsey’s statement contains all that needs to be known concerning the suspension of US President, Donald Trump from its platform.

Okonjo-Iweala disclosed this in an interview with Arise TV on Friday evening.

  • “Twitter tries to help the public conversation in the world and gives people a means to engage on important issues,” she said.

On the decision to censor Donald Trump

She said the Board agreed as a team to have one voice on the decision to suspend Donald Trump from the service and that CEO Jack Dorsey gave all that needed to be known.

Okonjo-Iweala stated;

  • “Being on the Twitter board, I have to respect our rules for communications on what is happening. I have to be very honest that we as a board agreed that we have a team that will deal with this, to make sure that we have one voice. But, I can tell you that if you want to know why the decisions were taken, please look at the statement by the CEO, Jack Dorsey, I think it tells you all you want to know.
  • “Twitter is an organization that has rules under which it operates, and if you read what it puts out, you will see that things are being implemented according to the rules.

On welcoming rules and regulations for the social media giant

Okonjo-Iweala said;

  • “Let’s wait and see, I don’t want to pre-judge or comment on anything. I don’t want to go beyond what I am willing to say, but let’s wait and see. These are very difficult times in the world. We all saw what happened in the United States. We have to be very careful. We would see what the future would be for the tech companies.”

Flash back:

  • Nairametrics reported that social media network, Twitter, permanently suspended U.S President, Donald Trump, citing the risk of further incitement of violence.
  • Jack Dorsey, the CEO and founder of Twitter, said that the decision to ban Donald Trump from the social network was the right decision, but one that sets a dangerous precedent.

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Economy & Politics

2021 budget: Lagos to fund deficit of N192.49 billion with internal, external loans

Lagos to fund 2021 budget deficit of N192.494 billion by a combination of internal and external loans.



Sanwo-Olu presents N1.1 trillion 2020 budget

The Lagos state government has disclosed that it will fund its 2021 budget deficit of N192.494 billion by a combination of internal and external loans.

This was disclosed by the State’s Commissioner for Economic Planning and Budget, Samuel Egube, while presenting the state’s budget for 2021 at a media round table session.

According to him, the total revenue estimate is N971.02 billion, consisting of internal generated revenue (IGR) of N723.81 billion; capital receipts (N71.81 billion); and federal transfer of N175.40 billion.

He said, “The Lagos 2021 budget is made up of N702.93 billion for capital expenditure and N460.49 billion for recurrent expenditure, implying 60:40 capital to recurrent ratio against 2020 budget which was at 55:45 capital to recurrent ratio.

“The breakdown of Lagos recurrent expenditure shows that total personnel cost (N168.72 billion); total overhead costs (N260.07 billion); and debt charges (N31.87 billion).”


Also at the event, Commissioner for Finance, Rabiu Onalapo, stated that the state will local debt instrument through domestic bond issuance to fund the deficit in its 2021 budget.

He said, “The debts are totally tied to capital projects adding that the state’s 19.8% debt to revenue ratio is projected to rise to 22% in 2021.

“This remains below the World Bank and federal government’s benchmarks of 40% and 30% respectively.”

Key Highlights and Projects under the Budget

  • Roads and other infrastructure: A provision of N166.579 billion is provided for the construction and maintenance of roads and other infrastructure within the state.
  • Traffic Management/Transportation: A total of N93.745 billion was budgeted under the transportation family for Blue and Red rail lines, Junction improvement all around the state, Completion of trailer parks in the state and development of quality bus corridors amongst others.
  • Education: The sum of N146.935 billion was budgeted for the education sector. The figure is N10.835 billion higher than the 2020 provision of N136.100 billion.
  • Science and Technology: Sum of N23.50 billion is provided for the building and upgrading of IT infrastructure statewide. This consists of N17.131 billion for the Smart City Project. The balance of N6.371 billion is earmarked for the e-GIS Land automation system, single billing system and ease of tax payment/levels among others.

What you should know

Babajide Sanwo-Olu, governor of Lagos, signed the 2021 Appropriation Bill into law on December 31, 2020.

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This month, the Lagos State Government projected a monthly target of N60.318 billion Internally Generated Revenue (IGR) for the 2021 fiscal year.

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Economy & Politics

Lagos to spend 60% of N1.16 trillion budget on capital projects

60% of Lagos State’s 2021 budget will go into capital projects, says the state’s Commissioner for Budget and Economic Planning.



Lagos State doesn’t have money – Commissioner for Economic Planning and Budget Samuel Egube 

Lagos State announced that it will increase infrastructure spending in 2021 to 60% of its budget, in a bid to repair damages inflicted by hoodlums in October following the EndSARS protests.

This was disclosed by the Lagos State Commissioner for Budget and Economic Planning, Sam Egube, in a briefing with newsmen, on Thursday.
He stated that:
“The projects would be aimed at massive infrastructure renewal and development. While we were recovering from the pandemic, the EndSARS protests and the aftermath of its hijack took us back economically and socially.”
The Commissioner added that the state wanted to rise above the challenges that had been a roadblock to development in 2020, as the state would allocate to its expenditure plans through its projected IGR of N971 billion and debt finance of N192 billion for its budget servicing.
The Commissioner said N24 billion would be used to develop the Lagos Smart City project which would see the Lagos Government build 3,000KM of internet fiber network and 2,000 CCTV across the state, while healthcare is 9% of budget spending at N106 billion.

What you should know 

  • Nairametrics reported last month that the Lagos State House of Assembly approved the sum of N1.163 trillion, as the total budgetary allocation for 2021.
  • This month, the Lagos State Government projected a monthly target of N60.318 billion Internally Generated Revenue (IGR) for the 2021 fiscal year.

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