Economy
Sharp Rise in Nigeria’s Debt to Revenue Ratio Worries Fitch
By Dipo Olowookere
United States-based rating agency, Fitch Ratings, has expressed worry about the sharp increase in the debt to revenue ratio of Nigeria.
A director at Fitch, Mr Mahmoud Harb, informed Reuters in a chat that this and another factor could force his organisation to further downgrade the rating of Africa’s largest economy.
Mr Harb listed the other factor that could trigger a rating lowering as a rising decline in the foreign exchange inflows into the country, which is mainly derived from crude oil sales.
According to Fitch, Nigeria will need not less than $23 billion to meet its external financing needs in 2020 and the few options the nation has is to run down its foreign reserves.
Business Post reports that as at the close of business on Monday, June 22, 2020, Nigeria had $36.260 billion in its reserves, lower than $36.302 billion on Friday, June 19, 2020.
“We have two elements that could lead us to take a negative rating action/downgrade on Nigeria.
“Aggravation of external liquidity pressures and a sharp rise in government debt to revenues ratio,” Mr Harb informed Reuters.
In April 2020, Fitch downgraded Nigeria to “B” with a negative outlook from “B+”. The reason for this action then was an aggravation of pressure on the country’s external finances.
The local authorities in March reviewed the 2020 budget, bringing down the crude oil benchmark to $30 per barrel because of a sharp decline in the price of the commodity at the global market.
Two months after, the government further reduced the threshold to $25 per barrel after prices fell below $20 per barrel at the international space.
The federal government, which had planned to approach the foreign debt market for a Eurobond of $2.36 billion, shelved the plan and converted it to an N850 billion domestic debt programme.
The funds would be sourced from the sale of debt securities like the FGN Bonds, treasury bills and others, with proceeds to be used for the budget deficit.
Recently, it was reported that in the first quarter of 2020, Nigeria’s debt service to revenue ratio stood at 99 percent, meaning that for every N100 generated by the country, N99 was used to service the various debts incurred by the government.
On Monday, Business Post reported that the Debt Management Office (DMO) assured Nigerians that there will never be a situation where China will have to take possession of the projects financed with its loans because of payment default.
According to the DMO, adequate provisions have been made to repay the debts, noting that, “Nigeria explicitly provides for debt service on its external and domestic debt in its annual budgets.”
“In effect, this means that debt service is recognised and payment is planned for.
“In addition, a number of the projects being (and to be) financed by the loans are either revenue generating or have the potential to generate revenue,” the DMO further said.
The debt office had said in a statement last week that as at March 31, 2020, the total borrowing from China stood at $3.121 billion at an interest rate of 2.50 percent per annum, with a 20-year maturity and a 7-year moratorium.
The agency said the low interest rate reduces the interest cost to the government, while the long tenor enables the repayment of the principal sum of the concessional loans over many years.
“These two benefits make the provisions for debt service in the annual budget lower than they would otherwise have been if the loans were on commercial terms,” the debt office said.
By Aduragbemi Omiyale
Nigeria slightly surpassed its quota set by the Organisation of the Petroleum Exporting Countries (OPEC) in July 2026.
In the month under review, the country produced about 1.57 million barrels of crude oil per day.
It was the third consecutive month Africa’s largest oil-producing nation was meeting its monthly quota, set to stabilise the price of the commodity on the global market by the oil cartel.
Data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Wednesday showed that the 1.5 million barrels per day ceiling for Nigeria was surpassed last month.
The agency disclosed in a statement today that the country produced 1.505mbpd of crude oil and 0.17mbpd of condensate, bringing the combined daily production to 1.67mbpd.
In the month under review, the daily peak production of crude oil and condensate was 1.78mbpd, while the lowest daily production was 1.57mbpd.
Although Nigeria met its OPEC quota in the month of July, the statistics show that on a month-on-month basis, production fell by 4 per cent.
This was attributed to the decline in production due to operational challenges experienced at the Erha and Akpo fields, which impacted crude oil output during the period under review.
These disruptions constrained production volumes and contributed significantly to the overall reduction in national crude oil output.
Despite the challenges, production operations across most other producing assets remained relatively stable, with operators implementing measures aimed at maintaining production efficiency and minimising the impact of operational constraints, NUPRC stated.
By Aduragbemi Omiyale
The over 9 billion shares of Lasaco Assurance Plc issued to shareholders of the company via a rights issue have been listed on the Nigerian Exchange (NGX) Limited.
The equities were brought to Customs Street on Wednesday by the organisation, increasing its total issued and fully paid-up share capital.
Lasaco Assurance, which scaled the recapitalisation hurdle of the National Insurance Commission (NAICOM) in July 2026, raised fresh capital from the capital market to shore up its capital base.
The underwriting firm got about N18.5 billion from the rights issue, which involved the issuance of 9,236,321,546 ordinary shares at a unit price of N2.00.
The exercise was on the basis of five new ordinary shares for every existing six ordinary shares held as of the close of business on Friday, February 20, 2026.
Confirming the listing of the additional stocks of Lasaco Assurance today, the Head of Issuer Regulation Department of NGX RegCo, Mr Godstime Iwenekhai, announced in a circular that, “Trading licence holders are hereby notified that an additional 9,236,321,546 ordinary shares of 50 Kobo each of Lasaco Assurance Plc were today, Wednesday, August 12, 2026, listed on the daily official list of Nigerian Exchange Limited.
“The additional shares arose from the company’s rights issue of 9,236,321,546 ordinary shares of 50 Kobo each at N2.00 per share on the basis of five new ordinary shares for every existing six ordinary shares held as of the close of business on Friday, February 20, 2026.
“With the listing of the additional 9,236,321,546 ordinary shares, the total issued and fully paid-up share capital of Lasaco Assurance Plc has now increased from 11,083,585,855 to 20,319,907,401 ordinary shares of 50 Kobo each.”
By Adedapo Adesanya
The Nigerian Insurers Association (NIA) has said the successful recapitalisation of the insurance industry will strengthen the sector’s ability to support financial stability and economic growth.
NIA Chairman, Mrs Ebelechukwu Nwachukwu, said a well-capitalised insurance industry would be better positioned to meet its obligations promptly, underwrite complex and large-scale risks and serve as a dependable pillar of the Nigerian economy.
She made the remarks while commending the National Insurance Commission (NAICOM) for its structured implementation of the new minimum capital requirements under the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
Mrs Nwachukwu said NAICOM’s clear guidelines, systematic verification process, defined timelines and rigorous supervision had provided operators with a credible framework for navigating the recapitalisation exercise.
She described the outcome as a major milestone for the industry and congratulated the 43 insurance and reinsurance companies that have successfully met the prescribed minimum capital requirements.
According to her, the exercise represents “a major win not just for regulators and operators, but for policyholders, investors and the wider Nigerian economy.”
Mrs Nwachukwu said the association would continue to work with NAICOM and other stakeholders to consolidate the gains of the exercise, with emphasis on sustainable industry growth, stronger market conduct and improved consumer confidence.
The official also expressed solidarity with the eight companies still undergoing final verification and regulatory review, urging them to remain confident as NAICOM completes the process within the 14-day review period.
The NIA chairman assured policyholders and the wider business community that the insurance industry would emerge from the recapitalisation exercise stronger, more resilient and better positioned to contribute to Nigeria’s economic development.
