Economy
Nigeria May Begin to Borrow to Service Debts by 2025—Paul Alaje
By Dipo Olowookere
A renowned economist and Partner at SPM Professional, Mr Paul Alaje, has warned that the debt profile of Nigeria may continue to rise, with the nation not making enough to service it, and resorting to borrowing to pay interests on the borrowings.
He said this when he appeared as a guest on Arise Television’s breakfast programme, The Morning Show, on Monday, January 8, 2024.
Business Post reports that in December 2023, the Debt Management Office (DMO) said Nigeria’s total public debt stock was 87.91 trillion in the third quarter of last year.
It was also reported by this newspaper that after the approval of the securitisation of the N7.5 trillion ways and means by the National Assembly, the debt profile of the country could rise to N95 trillion.
Speaking on Arise TV today, Mr Alaje charged the government of Mr Bola Tinubu to look for innovative ways to generate more revenue for the country, especially from the solid minerals sector, tasking the federal government to slow down its appetite for borrowing and improve its revenue.
“The truth is that, by 2025, we will have to borrow to service debt. What does that mean? We will still put our revenue projection but by the end of 2025, when the 2026 budget is presented, we may need to borrow to service debt, I hope this will not be the situation because it is not a good projection.
“Unfortunately, if we don’t depart from the current situation, this may be where we find ourselves,” he said on the show monitored by Business Post.
Speaking further, he said, “You ask whether the 2024 budget inspires hope and by our training and the oath we swore, it is not for me to say yes or no but there are things we need to look at in the budget to arrive at an answer.
“Nigeria is expected to grow between 7 and 12 per cent gross domestic product (GDP) if we want to be at par with other nations. The budget has said we should grow by over 3 per cent; the inflation, according to the Central Bank of Nigeria (CBN) is expected to be 6 to 9 per cent, but this budget said 21 per cent this year perhaps because it is the first budget of President Tinubu. This budget is already telling us that things are going to be tough, that is the price of commodities you bought in 2023 will increase by an average of 21 per cent in 2024.
“Most importantly, Mr President spoke on the human development index and he said it is the key area he is focusing but let’s zoom on it a little. We are expected to invest between 20 and 25 per cent of our annual budget but when you see what went into education, we are doing less than 6 per cent instead of 15 to 25 per cent.
“Let’s look at health, which should be 15 per cent based on the Abuja Accord but the 2024 budget is doing less than that. Are these inspiring as you asked me earlier? I want to believe his next budget would be better.
“I hope the budget deficit does not increase times two because we have N8 trillion proposed deficit in 2024 but that may rise to about N12 trillion or double. Just write this down and keep it to around November or December when you will see a supplementary budget without revenue expectation as we have done in the last 12 years.
“You should start to see pressure from the end of the first quarter when the government compares its revenue expectations with the actual earnings; there will be a mismatch because fundamentally, there is a need for an adjustment that has not been done,” he stated.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Wednesday, August 5, as the market witnessed weaker trading activity with only two deals executed.
In the midweek session, the volume of securities exchanged by investors dropped 99.9 per cent to 802 units from the 1.6 million units recorded on Tuesday. The value of securities further decreased by 99.6 per cent to N208,240 from the preceding session’s N47.6 million, and the number of deals significantly went down by 93.9 per cent to two deals from the 33 deals recorded a day earlier.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and Central Securities Clearing System (CSCS) Plc with 76.9 million units transacted for N5.5 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, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
There were no price gainers or losers yesterday.
As a result, the market capitalisation stood unmoving at N2.739 trillion, while the NASD Security Index (NSI) remained unchanged at 4,563.96 points.
By Adedapo Adesanya
The Naira slid against the US Dollar by N2.28 or 0.17 per cent in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, August 5, to N1,363.85/$1 from N1,362.55/$1.
The local currency also declined against the Pound Sterling in the official market during the session by N5.97 to close at N1,837.38/£1 compared with Tuesday’s closing rate of N1,831.41/£1, and against the Euro, it crashed by N6.54 to quote at N1,575.25/€1 versus the preceding session’s N1,568.71/€1.
But at the black market, the Nigerian Naira traded flat against the greenback yesterday at N1,400/$1, and also remained unchanged at the GTBank FX desk at N1,373/$1.
The Central Bank of Nigeria (CBN) says rates have narrowed to below two per cent, while the country’s external reserves have risen above $52.5 billion, reflecting the impact of its ongoing monetary and foreign exchange reforms.
CBN Governor Yemi Cardoso, represented by the Acting Director of Corporate Communications and Investor Relations, Mrs Hakama Sidi-Ali, disclosed this on Tuesday during the CBN Fair in Gombe. He noted that reforms introduced since 2023 had significantly reduced the disparity between the official FX market and the parallel market.
“The Naira continues to strengthen, with the spread between official and Bureau de Change rates now below two per cent,” he said, adding that reserves at $52.5 billion were supported by sustained inflows and renewed investor confidence in the economy.
Interbank FX transactions slid as weaker market activities dropped total Dollar volume exchanged to $75.35 million, a 51.8 per cent decline from $156.23 million in turnover quoted at the previous close.
The deals at the NFEM window also fell as data from the central bank put Wednesday’s quote at 82 from 139.
In the cryptocurrency market, major were down as global risk sentiment softened as a key world equity index slipped and chipmakers fell.
The MSCI All Country World Index snapped a five-day run to fall 0.2 per cent as chipmakers retreated on both sides of the Pacific. South Korea’s Kospi, a bellwether for the AI trade, dropped 4.4 per cent.
Ripple (XRP) depleted by 1.7 per cent to $1.05, Binance Coin (BNB) decreased by 1.0 per cent to $594.87, Cardano (ADA) depreciated by 0.9 per cent to $0.1884, TRON (TRX) shrank by 0.2 per cent to $0.3261, Solana (SOL) crumbled by 0.1 per cent to $74.00, and Dogecoin (DOGE) went down by 0.1 per cent to $0.0697.
On the flip side, Ethereum (ETH) gained 2.3 per cent to trade at $1,911.41, and Bitcoin (BTC) rose by 0.8 per cent to $64,759.28, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Dipo Olowookere
The domestic stock exchange rebounded by 0.05 per cent on Wednesday on the back of renewed bargain-hunting by investors, though the level of activity waned.
After bleeding for a few days, the Nigerian Exchange (NGX) Limited heaved a sigh of relief yesterday, as the All-Share Index (ASI) gained 109.41 points to close at 244,912.24 points compared with the previous day’s 244,802.83 points, and the market capitalisation garnered N71 billion to settle at N158.087 trillion versus Tuesday’s N158.016 trillion.
Business Post reports that despite the rebound recorded by Customs Street at midweek, the market breadth index remained negative, as there were 20 price advancers and 29 price decliners, implying bearish investor sentiment.
Linkage Assurance appreciated by 9.94 per cent to N1.77, AVA Capital rose by 9.55 per cent to N10.90, Fortis Global Insurance advanced by 7.69 per cent to N2.80, McNichols gained 7.34 per cent to finish at N5.85, and Coronation Insurance surged by 5.51 per cent to N2.49.
Conversely, Honeywell Flour depreciated by 9.94 per cent to N16.30, PZ Cussons gave up 9.94 per cent to trade at N74.75, Zichis crashed by 9.74 per cent to N20.76, Learn Africa slipped by 9.62 per cent to N9.40, and Neimeth tumbled by 8.33 per cent to N8.25.
The busiest equity was FCMB, with a turnover of 369.2 million units valued at N4.1 billion. Chams transacted 46.7 million units worth N201.8 million, First Holdco transacted 43.5 million units for N5.7 billion, Access Holdings sold 29.8 million units worth N778.0 million, and Linkage Assurance exchanged 19.6 million units valued at N33.5 million.
At the close of transactions, market participants bought and sold 824.1 million units worth N25.5 billion in 48,114 deals, in contrast to the 1.6 billion units sold for N28.7 billion in 54,160 deals a day earlier, showing a shortfall in the trading volume, value, and number of deals by 48.49 per cent, 11.15 per cent, and 11.16 per cent, respectively.
