Economy
Nigeria’s Borrowing Spree, Any Cause for Worry?
By Afrinvest
A new report by Afrinvest has taken a look into the recent borrowings by the Federal Government through the sale of bonds.
Afrinvest, in its weekly update, noted that much has been said on Nigeria’s aggressive borrowing spree from domestic and international capital markets since 2016, and deservedly so.
Since the start of a prolonged global oil price drop in H2:2014, the Nigerian economy has recorded a significant downturn in performance as plummeting government revenues and the resultant FX crisis dragged the economy into its first recession in 25 years.
As a result, an expansionary budget of N6.1tn was adopted in the 2016 fiscal year to boost growth and fund more capital projects, with a deficit of N1.8tn estimated for the period. No thanks to the resumption of oil militancy in February 2016 and substantial underperformance of non-oil revenue relative to projections, actual FGN retained revenue was 18.0% short of target, thus deficit widened further. In order to plug this deficit, the Federal Government embarked on an aggressive borrowing spree and this has been sustained into 2017.
To this end, the Debt Management Office (DMO) decided to alter the public debt mix by leveraging on relatively underexplored foreign currency borrowing capacity.
Multilateral loans were sought from the AFDB (US$646.6m) in addition to bi-lateral loans from the China EXIM Bank, France AFD and Japan JICA.
Following improvements in domestic investment landscape at the turn of the year, Nigeria returned to the International capital market after a 3-year hiatus, successfully raising US$1.5bn via Eurobonds and US$300.0m in diaspora bond.
On the domestic front, the DMO has continued with its monthly bond auctions and took it a step further by introducing atypical bonds such as the Savings Bond and a N100.0bn Sukuk offering closing today.
The 2017 budget is projecting another record expenditure year, with fiscal deficit estimated at N2.4tn – domestic borrowing accounting for 53.0% (N1.3tn) of the total while foreign borrowing was projected at N1.1tn.
Whilst the deficit funded expansionary fiscal policy pursued in 2016 had a positive impact of growth – as seen in GDP by expenditure numbers in 9M:2016 – it has come at a cost as public debt profile has remained on the uptrend over the years.
According to the DMO, FGN total debt stood at N10.9tn as of year-end 2015 but has risen an astonishing 48.1% in 15 months to N16.2tn in Q1:2017.
The rising debt profile is not surprising given the widening budget deficit and large depreciation of the Naira; however, the cost of servicing the mounting obligations took up more than 60.0% of revenue in H1:2016 and has become a major source of concern on debt sustainability.
The major argument for increased deficit spending is that the economy is underleveraged with a debt to GDP ratio of 20.0%, but also hard to ignore is the offsetting low non-oil revenue to GDP ratio. Nigeria’s Tax/GDP ratio is 6.0%, which is relatively low when compared to SSA peers – South Africa (26.2%) and Kenya (15.4%).
The nation’s tax collection and administration system is still deemed inefficient with multiple tax system and a high tax evasion & avoidance rate.
Despite the recent drive to increase tax revenue, not much has changed in terms of actual results. In fact, federally collected Non-oil revenue fell 4.4% in FY:2016 to N3.0tn. To their credit, fiscal authorities have doubled down on tax reforms including the recently launched Voluntary Asset and Income Declaration Scheme (VAIDS) which grants taxpayers a time-limited opportunity to regularise their tax status without penalty.
However, with the economy challenged, the odds of significantly boosting Tax revenue in the near term is slim and we expect budget deficits to remain high for the next 2-3 years. What does this imply for medium term debt sustainability? Our opinion on this is a bit nuanced. The structure of Nigeria’s public debt is heavily tilted towards the domestic market (up to 77.9% of aggregate debt) and this easier to deal with in the event of a credit crisis.
Foreign debt obligations are also mostly multilateral and bilateral in nature (78.0% of total foreign debts) which are typically long tenured and granted at concessionary rate.
Thus, we do not expect a debt crisis in the near term but policymakers will need to further diversify revenue base or start deleveraging to avert one in the medium term.
Source: Afrinvest
By Adedapo Adesanya
Nigeria’s economic growth rate eased in the first quarter of 2026 to 3.89 per cent year-on-year, as a slowdown in the oil sector offset gains recorded in the non-oil sector.
The economy, measured by Gross Domestic Product (GDP), slowed in the first three months of this year from the 4.07 per cent recorded in the previous quarter (Q4 2025), according to data released by the National Bureau of Statistics (NBS) on Monday. However, it was higher than the 3.13 per cent recorded in the first quarter of 2025.
In the first quarter of 2026, Nigeria recorded an average daily oil production of 1.55 million barrels per day, lower than 1.62 million barrels per day in the same quarter of 2025 and lower than the 1.58 million barrels per day in the fourth quarter of 2025.
The real growth of the oil sector was 2.57 (year-on-year) in Q1 2026, indicating an increase of 0.70 per cent compared with the 1.87 per cent in the corresponding quarter of 2025.
However, growth decreased by 4.22 per cent compared to 6.79 per cent in Q4 2025, and on a quarter-on-quarter basis, the oil sector recorded a growth rate of 9.31 per cent.
For the non-oil sector, it contributed 96.08 per cent to the nation’s GDP between January and March 2026, versus 96.03 per cent in the same period of last year and lower than 97.13 per cent in the fourth quarter of last year.
During the quarter under review, agriculture grew by 3.15 per cent. The growth of the industry sector stood at 3.50 per cent versus 3.42 per cent in the first quarter of last year, while the services sector recorded a growth of 4.31 per cent, in contrast to 4.33 per cent in the same quarter of 2025.
In terms of share of the GDP, the services sector contributed 57.73 per cent compared to 57.50 per cent in the first quarter of 2025.
In the quarter under review, aggregate GDP at basic price stood at N110.79 trillion in nominal terms, higher than N94.1 trillion in the first quarter of 2025 by 17.79 per cent.
By Adedapo Adesanya
The Centre for the Promotion of Private Enterprise (CPPE) has warned that Nigeria must not forgo its commitment to boosting domestic refining capacity amid growing advocacy for the importation of petroleum products.
In a statement, the centre explained that Nigeria must, therefore, avoid drifting into a policy regime that undermines domestic production in the name of competition or liberalisation.
The Chief Executive Officer (CEO) of the think tank, Mr Muda Yusuf, in a press release, warned that Nigeria is signalling to investors what happens if a multi-billion-dollar Dangote refinery investment of continental significance is confronted with regulatory uncertainty and policy headwinds.
The development comes as the management of the refinery has approached the court to battle against regulators, including the Nigerian National Petroleum Company (NNPC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), over their decision to allow importation.
The dispute stems from a lawsuit filed by Dangote Refinery against the Attorney-General of the Federation, Mr Lateef Fagbemi, over fuel import licences granted to six marketers and the state oil company. The case has since widened the debate around local refining, market competition and the future direction of Nigeria’s downstream petroleum industry.
According to the centre, the increased call speaks to the very architecture of Nigeria’s economic philosophy, the future of industrialisation, the resilience of the macroeconomy and, ultimately, the preservation of the country’s economic sovereignty.
“No nation has ever imported its way to industrial greatness. Prosperous economies are built on production, refining, manufacturing, value addition and the strengthening of domestic productive capacity.
“Countries that become excessively dependent on imports inevitably export jobs, weaken domestic industries, erode local investments and mortgage their economic sovereignty.
“Nigeria must therefore avoid drifting into a policy regime that undermines domestic production in the name of competition or liberalisation,“ Mr Yusuf noted.
By Adedapo Adesanya
Airtel Africa has launched a share buyback programme worth up to $110 million, signalling confidence in its strong balance sheet and financial flexibility as the telco seeks to return value to shareholders.
The company disclosed in a notice filed on the portal of the Nigerian Exchange (NGX) Limited that the programme would involve the repurchase of up to 1 per cent of its issued share capital as part of its capital allocation policy.
The telco further stated that all shares repurchased under the programme would be cancelled as the sole purpose of the exercise is to reduce the company’s capital base.
“The sole purpose of the buyback programme is to reduce the capital of the company. As such, all shares purchased under the buyback programme will be cancelled,” the notice stated.
According to the organisation, the initiative reflects the board’s confidence in the group’s financial position and its ability to continue investing across its African operations while rewarding shareholders.
“The board’s decision reflects the continued strength of the Group’s balance sheet and its ability to preserve financial flexibility while supporting ongoing investment to capitalise on the compelling growth outlook across the Group’s footprint,” the notice stated.
Airtel Africa said it had entered into an agreement with Barclays Capital Securities Limited to execute the programme through on-market purchases of its ordinary shares, which would subsequently be acquired by the company. The agreement, according to the notice, consists of two parallel elements.
Under the non-discretionary arrangement, Barclays will independently purchase between $50 million and $60 million worth of ordinary shares without influence from the company.
The second component is a discretionary arrangement under which Airtel Africa may instruct Barclays to purchase up to an additional $50 million worth of shares, subject to the provisions of the Market Abuse Regulation.
The programme commenced on May 22, 2026, and is expected to run until no later than November 27, 2026, unless terminated earlier in line with the terms of the agreement.
Airtel Africa said further tranches of the programme could be announced later to enable it fulfil its objective of repurchasing up to one per cent of its issued share capital as at the date of the announcement.
The telecommunications company also explained that the purchases would be carried out in line with shareholder approvals, UK listing regulations and market abuse rules. It noted that shareholders had earlier granted the company authority at its annual general meeting held on July 9, 2025, to repurchase a maximum of 366.07 million ordinary shares.
Following the completion of an earlier buyback programme, Airtel Africa said the remaining authority available for repurchases currently stands at 357.04 million ordinary shares.
The company further disclosed that Barclays may continue executing the discretionary portion of the buyback autonomously during closed periods under irrevocable and non-discretionary instructions permitted by regulation.
The new buyback announcement comes weeks after Airtel Africa reported strong financial and operational performance for the year ended March 31, 2026 (Q1), supported by growth in data usage, mobile money services and improved profitability across its markets.
According to its audited financial statement, the group recorded a 29.5 per cent increase in revenue to $6.42 billion from $4.96 billion in the previous year, while profit after tax (PAT) rose by 147.4 per cent to $813 million from $328 million.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism10 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn