Economy
Moving Towards Debt Sustainability
By FSDH Research
The drop in government’s revenue in the face of the rising government expenditure has led to an increase in Nigeria’s public debt (external and domestic debt).
Consequently, the ratio of debt service-to-revenue has reached unsustainable levels. The Debt Management Office (DMO) in its 2016 Debt Sustainability Analysis (DSA) report notes that the debt service-to-revenue ratio (external and domestic debt service) of the Federal Government of Nigeria (FGN), excluding states and local governments breached the country’s specific threshold of 28%.
However, the FGN is taking steps towards debt sustainability by diversifying its debt profile through the issuance of the FGN Savings Bond, Diaspora Bond and Sukuk.
Additionally, the DMO disclosed that the FGN plans to refinance domestic debt, particularly the high cost Nigerian Treasury Bills (NTB) by issuing US$3bn in foreign debt of longer tenor. The planned refinancing is in line with the debt management strategy of the FGN for 2016-2019, with the overall objective of reducing its total cost of borrowing to achieve the country’s strategic target of an optimal debt mix of 60% and 40% for domestic and external debts, respectively.
Our analysis of the data from the DMO as at June 2017 shows that Nigeria’s total debt stock stood at N19.64trn, representing an increase of 13.12% from the December 2016 figure of N17.36trn.
A breakdown of the debt stock shows that external debt accounted for 23.44% (N4.60trn), while domestic debt stock accounted for 76.56% (N15.03trn).
If the DMO were to move the external debt position as at June 2017 to the planned optimal level of 40%, it means that it would have to refinance N3.25trn of the local debt in favour of the external debt.
Looking at the FGN’s debt structure, the domestic debt component stood at N12.03trn as at June 2017. NTB, which is the short-term debt, accounted for 30.77% or N3.70trn of the domestic debt of the FGN. This is higher than the target of 25% under the debt management strategy.
Consequently, the FGN is likely to replace the short-term debt with long-term debt to achieve its debt structure target. The planned restructuring of the debt stock of the FGN will result in a reduction in the average weighted cost of borrowing.
This reduction in the cost of borrowing will be as a result of lower interest rates in the international market and a reduction in the holdings of high cost NTBs.
The average yield on the 364-Day NTB from January till September 20, 2017 is 22.50% compared with the average yield on the FGN 6.375% July 2023 Eurobond of 5.85%.
Following the FSDH Research report issued on August 28, 2017 titled “A Drop in the Nigerian Treasury Bills Yield Imminent” the yield on the 364-Day NTB dropped from 22.72% in August 30, 2017 to 20.47% on September 21, 2017. The yield on the FGN Bond has also dropped in the market.
The total amount of domestic debt service in 2016 stood at N1.20trn and represents 58% of the federal allocation disbursed to the FGN. As at June 2017, the total domestic debt service stood at N684.45bn, representing 62% of the total FGN allocation of N1.10trn for the period. This represents an improvement from total domestic debt service as at March 2017, which stood at N449bn representing 82% of the total FGN allocation for the period.
We note that FGN revenue has been challenged in the last two years on account of the drop in oil revenue.
Furthermore, the fact that a significant part of government revenue goes towards interest payments means that little revenue is left for the government to undertake capital projects. The FGN needs to improve critical infrastructure in the country to increase the competitiveness of the economy to attract investments and maintain economic growth.
This effort coupled with the current tax reform of the FGN, will increase revenue accrued to the government and improve the debt service-to-revenue ratio. As the yields on the FGN securities continue to drop there will be opportunities for more activities in the corporate bond market.
By Adedapo Adesanya
The Nigeria Revenue Service (NRS) says the rollout of electronic invoicing (e-invoicing) will strengthen tax compliance, curb revenue leakages and improve transparency in tax administration as it moves to fully digitise the country’s tax system.
The Project Lead for the NRS e-Invoicing Project, Mr Mohammed Bawa, stated this at the DigiTax E-Invoicing Compliance Breakfast Session held in Lagos on Wednesday.
The event, organised by DigiTax, an NRS-accredited e-invoicing platform, formed part of efforts to support the agency’s ongoing education and sensitisation campaign on the e-invoicing mandate.
Mr Bawa said the initiative aligns with global trends in tax digitisation and is expected to help improve Nigeria’s tax-to-GDP ratio, which remains one of the lowest in Africa.
According to him, the system will provide the NRS with greater visibility into transactions across sectors, formalise activities within the informal economy and standardise invoice formats nationwide using globally recognised invoice schemas.
He added that e-invoicing would improve operational efficiency for both businesses and tax authorities while supporting the NRS’ transition from manual and electronic tax administration processes to a fully automated system-to-system interaction model.
Mr Bawa noted that the legal framework for implementation is backed by the Nigeria Tax Administration Act, which prescribes penalties for non-compliance.
He disclosed that the NRS has completed onboarding large taxpayers and is preparing to enforce compliance with defaulting entities.
According to him, medium taxpayers are expected to begin compliance in the third quarter of 2026, while onboarding of emerging taxpayers will commence in 2027, with full adoption targeted for all taxpayers by the end of 2028.
Mr Bawa urged taxpayers yet to be onboarded onto the platform to begin the process and work with accredited service providers to ensure compliance.
On his part, Country Director of DigiTax Nigeria, Mr Olumide Akinsola, urged businesses to look beyond their internal systems and assess the compliance status of suppliers and counterparties.
He warned that businesses whose suppliers fail to transmit invoices through the MBS platform risk losing eligibility to claim Value Added Tax (VAT) input credits on such transactions, describing the resulting supply chain exposure as a significant commercial risk that many organisations have yet to quantify.
Mr Akinsola also announced the launch of DigiTax’s white paper, The State of E-Invoicing Readiness in Nigeria, which examines compliance adoption trends and the readiness gap across different taxpayer segments.
He added that DigiTax operates in Nigeria, Kenya, Zambia and the United Arab Emirates (UAE), noting that experience from those markets shows businesses that integrate early are better positioned to avoid disruptions when enforcement begins.
By Aduragbemi Omiyale
The names of about 100,000 companies registered by the Corporate Affairs Commission (CAC) are about to be deleted for inactivity, especially for failing to file their annual tax returns, Business Post reports.
This information was disclosed by the CAC via a notice signed by its management on Wednesday, July 15, 2026.
The list contains organisations like the Nigeria-Poland Chamber of Trade Invest Ltd, Alariwo of Afrika Ltd, Ovation Sports International, First Union Pension Fund Administrators, Investopedia Limited, Baptist High School Abuja Ltd, and Yobe Aluminium Manufacturing Industries Ltd, amongst others.
In the statement, the commission said its decision to strike off the names of the affected firms from the register aligns with the provisions of Section 692(3) (3) and (4) of the Companies and Allied Matters Act (CAMA), 2020.
However, the affected companies can still salvage the situation by filing all outstanding annual returns and regularising their records within 90 days.
“Please note that companies that fail to comply within the stipulated timeline shall be struck off the register without further notice,” it declared, expressing its continued commitment to providing prompt and efficient registration and regulatory services to the satisfaction of its valued customers.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange gained 1.75 per cent on Wednesday, July 15, pushing the NASD Security Index (NSI) up by 74.20 points to 4,316.51 points from 4,242.31 points, as the market capitalisation added N44.54 billion to finish at N2.590 trillion compared with the preceding session’s N2.546 trillion.
During the session, there was an 11.5 per cent rise in the value of transactions at midweek to N72.7 million from the preceding session’s N65.2 million, as there was a 3.7 per cent growth in the number of deals to 28 deals from the previous session’s 27 deals, while the volume of securities slumped by 64.5 per cent to 4.9 million units from 13.7 million units.
At the close of trades, Great Nigeria Insurance (GNI) Plc ended as the most active security by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, with the second spot occupied by Infrastructure Credit Guarantee (Infracredit) Plc after selling 2.3 billion units valued at N6.5 billion, and the third position was taken by Central Securities Clearing System (CSCS) Plc, which exchanged 74.3 million units for N5.3 billion.
GNI Plc also finished the trading day as the most traded stock by volume on a year-to-date basis, with a turnover of 3.4 billion units traded for N8.4 billion, followed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units sold for N415.7 million.
Business Post reports that the market breadth index was negative yesterday, as there were two price gainers and three price losers.
11 Plc added N22.36 to its value to close at N250.00 per share versus N227.64 per share, and CSCS Plc improved by N7.95 to N90.35 per unit from N82.40 per unit.
On the flip side, FrieslandCampina Wamco Nigeria Plc lost N1.37 to end at N150.00 per share versus N151.37 per share, UBN Property Plc depreciated by 6 Kobo to N1.75 per unit from N1.81 per unit, and Food Concepts Plc dropped 1 Kobo to close at N2.49 per share versus N2.50 per share.
