Economy
Nigeria’s Debt Jumps 75.3% to N87.38trn in Q2 CBN Loan Securitization, Naira Float
By Adedapo Adesanya
The Debt Management Office (DMO) has said Nigeria’s total public debt rose by 75.3 per cent to N87.38 trillion at the end of the second quarter of 2023 against N49.85 trillion recorded in the first quarter of the year.
In the report published by the debt office on Thursday, there was a N37.53 trillion rise in the country’s internal and external debt in three months, the final quarter of President Muhammadu Buhari’s tenure.
The rise came as the country securitised the N22.71 trillion Ways and Means Advances of the Central Bank of Nigeria to the federal government. The overdraft is a loan facility through which the CBN finances the shortfalls in the government’s budget.
This also happened as the country liberalised the exchange rate in mid-June, a move that saw the Naira drop by over 40 per cent.
The DMO stated, “Nigeria’s total public debt stock as at June 30, 2023, was N87.38 trillion ($113.42 billion). It comprises the total domestic and external debts of the Federal Government of Nigeria, the thirty-six states, and the Federal Capital Territory.
“The major addition to the Public Debt Stock was the inclusion of the N22.712 trillion securitized FGN’s Ways and Means Advances.”
The statement also noted that other additions to the debt stock were new borrowings by the federal government and the sub-nationals from local and external sources.
It added, “The reforms already introduced by the present administration and those that may emerge from the recommendations of the Fiscal Reform and Tax Policies Committee are expected to impact debt strategy and improve debt sustainability.”
Business Post had earlier reported that the DMO projected that Nigeria’s public debt burden may hit N77 trillion following the National Assembly’s approval of the request by former President Muhammadu Buhari to restructure the CBN’s Ways and Means Advances.
The Director-General of the DMO, Ms Patience Oniha, during a public presentation of the 2023 budget organised by the former Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, noted that the debt would be N70 trillion without N5 trillion new borrowing and N2 trillion promissory notes.
However, the latest data showed that the current debt stock of N87.38 trillion exceeded the DMO’s projection (N77.33 trillion) by N10.38 trillion.
Further breakdown showed that Nigeria has a total domestic debt of N54.13 trillion and a total external debt of N33.25tn.
While the domestic debt makes up 61.95 per cent of total debt, the external makes up 38.05 per cent.
The domestic debt rose by 79.18 per cent from N30.21 trillion, while the external debt rose by 69.28 per cent from N19.64tn in Q1 2023.
In its 2022 Debt Sustainability Analysis Report, the DMO warned that the Federal Government’s projected revenue of N10 trillion for 2023 could not support fresh borrowings.
According to the office, the projected government’s debt service-to-revenue ratio of 73.5 per cent for 2023 is high and a threat to debt sustainability.
It noted that the government’s current revenue profile could not support higher levels of borrowing.
DMO has tasked the country to desist from borrowing and urged the government to encourage the private sector to fund some of the capital projects that were being financed from borrowing through the public-private partnership schemes.
It added that the federal government can reduce borrowing through the privatisation and/or sale of government assets.
Over the years, Nigeria’s low revenue generation has pushed the government to more borrowing.
However, President Bola Tinubu recently expressed his administration’s commitment to break the cycle of overreliance on borrowing for public spending and the resultant burden of debt servicing it places on the management of limited government revenues.
According to the Minister of Finance, Mr Wale Edun, the federal government has no intention to borrow from any local or foreign organisation as it is interested in boosting taxes and other revenue outlets.
“The federal government is not in a position to borrow at this time. Rather, the emphasis has to be on creating a stable macroeconomic environment. Stable inflation, stable exchange rate, an environment within which people can come and invest and thereby increase production and further grow the economy. Improve and create jobs and reduce poverty,” he said at the last Federal Executive Council (FEC) in August.
By Adedapo Adesanya
NASD Over-the-Counter (OTC) Securities Exchange remained in the negative territory after it further depreciated by 0.64 per cent on Friday, July 24, despite recording four price gainers.
The NASD Security Index (NSI) dropped 27.4 points at the close of business to settle at 4,294.75 points versus the previous day’s 4,383.48 points, while the market capitalisation gave up N16.49 billion to end at N2.577 trillion, in contrast to the N2.594 trillion it ended a day earlier.
The bourse was down during the session amid heavy sell-offs, with the volume of transactions skyrocketing by 693.9 per cent to 2.99 million units from Thursday’s 377,635 units.
Equally, the value of trades went up by 71.6 per cent to N69.4 million from N40.4 million, and the number of deals increased by 41.0 per cent to 55 deals from the preceding day’s 39 deals.
Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and Central Securities Clearing System (CSCS) Plc with 75.6 million units traded for N5.4 billion.
GNI Plc was also the most active stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
The market ended the session with four price gainers and two price losers, led by FrieslandCampina Wamco Nigeria Plc, which lost N7.44 to trade at N136.19 per share compared with the previous day’s N143.63 per share, and CSCS Plc, which declined by N1.64 to N93.63 per unit from N95.27 per unit.
But MRS Oil gained N13.50 to sell at N148.50 per share versus N135.00 per share, Afriland Properties Plc advanced by 56 Kobo to N17.41 per unit from N16.85 per unit, UBN Property Plc surged by 18 Kobo to N1.93 per share from N1.75 per share, and Food Concepts Plc climbed by 1 Kobo to N2.50 per unit from N2.49 per unit.
By Dipo Olowookere
Nigeria’s stock exchange succumbed to profit-taking on Friday, losing 0.19 per cent when the closing gong was hit at 4 pm.
Shares in the banking and energy sectors influenced the decline suffered by the Nigerian Exchange (NGX) Limited during the session, as they respectively closed lower by 0.40 per cent and 0.04 per cent.
The industrial goods index was flat yesterday, while the insurance counter gained 0.68 per cent and the consumer goods space chalked up 0.25 per cent. The gains by these two segments could not keep Customs Street in the green territory at the close of business.
As a result, the All-Share Index (ASI) retreated by 474.00 points to 247,357.40 points from 247,831.40 points, and the market capitalisation decreased by N306 billion to N159.588 trillion from N159.894 trillion.
Presco dropped 10.00 per cent during the trading day to close at N2,070.00, Thomas Wyatt crumbled by 9.93 per cent to N3.63, Trans-Nationwide Express plunged by 8.44 per cent to N2.82, Royal Exchange slipped by 7.86 per cent to N1.29, and LivingTrust Mortgage Bank shrank by 7.32 per cent to N3.80.
On the flip side, C&I Leasing improved by 9.48 per cent to N6.35, Cornerstone Insurance rose by 9.09 per cent to N6.00, RT Briscoe jumped by 8.61 per cent to N13.25, Honeywell Flour expanded by 7.38 per cent to N17.45, and Africa Prudential increased by 6.98 per cent to N13.80.
Despite the poor performance, the local bourse recorded a positive market breadth index after finishing with 35 price gainers and 25 price losers, representing strong investor sentiment.
It was a relatively quiet market on Friday, as the activity level dropped, with the trading volume down by 27.72 per cent to 565.5 million units from 782.4 million units, and the trading value contracted by 46.89 per cent to N29.9 billion from N56.3 billion, while the number of deals executed by investors soared by 16.03 per cent to 53,688 deals from 46,273 deals.
Access Holdings was the busiest stock for the session, with a turnover of 128.0 million units sold for N3.8 billion, First Holdco transacted 35.4 million units worth N4.3 billion, Chams exchanged 34.8 million units valued at N154.3 million, Zenith Bank traded 30.4 million units for N3.9 billion, and UBA sold 30.4 million units worth N1.5 billion.
By Adedapo Adesanya
The Naira marked a whole week of appreciation against the United States Dollar on Friday, July 24, further gaining N5.67 or 0.41 per cent to close at N1,362.09/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) compared with N1,367.76/$1 it ended on Thursday.
Equally, the local currency appreciated against the Pound Sterling in the official FX market yesterday by N10.83 to trade at N1,813.62/£1 versus the preceding day’s N1,824.45/£1, and improved against the Euro by N7.68 to settle at N1,549.10/€1, in contrast to the N1,556.78/€1 it was exchanged a day earlier.
However, at the parallel market and GTBank forex counter, the Nigerian currency remained unchanged against the greenback during the session at N1,400/$1 and N1,379/$1, respectively.
The Central Bank of Nigeria (CBN) buffer has been strengthened with sustained foreign portfolio inflows and robust foreign reserves, which stand above $52 billion.
The apex bank’s policy signals that the Naira will be stronger in the near term, with Nigeria clearing hurdles with FX reforms and settlement of all backlogs.
However, some traders expect that pressure may come due to foreign-currency buying from fuel importers as they make Dollar purchases to build inventories.
Meanwhile, Bitcoin (BTC), in the digital currency landscape, trimmed recent gains as it fell by 2.3 per cent to $63,787.73.
The weak action in the AI momentum trade is feeding through to crypto as well.
Further, Cardano (ADA) dropped 3.7 per cent to close at $0.1615, Solana (SOL) dipped by 2.8 per cent to $73.71, Ripple (XRP) crashed by 2.3 per cent to $1.08, Ethereum (ETH) slid by 1.9 per cent to $1,851.58, Dogecoin (DOGE) retreated by 0.8 per cent to $0.0694, Binance Coin (BNB) contracted by 0.7 per cent to $564.18, and TRON (TRX) lost 0.5 per cent to trade at $0.3292, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
