Economy
Nigeria Records 17% Debt Growth to N26.2trn as at September 2019 – DMO
By Adedapo Adesanya
Nigeria’s total debt grew by almost 17 percent in one year as at September 2019 to stand at N26.2 trillion, the Debt Management Office (DMO) has disclosed.
This disclosure was made in a press release where it was revealed by the Director-General of the DMO, Ms Patience Oniha, in Abuja on Friday during the presentation of public debt data as at September 2019.
“The comparative figure for September 2018 was N25.701 trillion which implies that in the 12 months period to September 2019 the Total Public Debt grew by 16.88 percent,” she said.
The breakdown showed that Total External Debt, across the Federal, States, and Federal Capital Territory (FCT) was N8.3 trillion (13.5 percent); while the Total Domestic Debt was 68.5 percent (Federal Government accruing N13.9 trillion – 53.0 percent with States and FCT amassing N4.0 trillion – 15.4 percent)
The DMO chief said a breakdown of the the total public debt as at September 2019 which includes Promissory Notes stood at N812.650 billion and has been issued to settle the FGN’s arrears to Oil Marketing Companies and State Governments under the Promissory Programme approved by the Federal Executive Council (FEC) and the National Assembly.
Speaking on the country borrowing which saw the country out of recession, Ms Oniha said: “Borrowing came in to fund the budget which included capital projects so when you finance capital projects, you create an entire economy around that in terms of employment, in terms of materials that you buy, in terms of what happens in the environment so there are vendors selling all sort of things so that is the description.”
“We are talking about the multiplier effect of borrowing to finance capital infrastructure and what we generate,” she said.
Ms Oniha also spoke about government issuing promissory notes to its creditors, stating that “these are arrears so it’s not that they did a contract for us now and then we decided to issue a promissory note. These are arrears from several years prior to 2017.”
“It is voluntary on the part of the creditor you don’t have to take a promissory note. You can wait when government has money in its budget to pay you.
“There are provisions in the budget just that they are not large so you can’t be sure when you will get it but you can wait there is no compulsion around it,” she added.
Speaking on new borrowings, she stated that: “the level of New Borrowings in the Appropriation Acts declined consistently since Nigeria exited the recession in the year 2017.
“The increase in the New Borrowings in the Appropriations Acts between 2015 and 2017 was due to the need to stimulate growth and create jobs in the economy as contained in the Economic Recovery Growth Plan (ERGP).”
According to her, “whereas the 2019 Appropriation Act provided for a total New Borrowing of N1.605 trillion split equally between Domestic and External, only the domestic component of N802.82 Billion was raised due to the late passage of the 2019 Appropriation Act and the expectation that the implementation of the 2020 Budget would commence on January 1, 2020.”
The Ratio of Domestic Debt to External Debt at 69:31 as at September 2019 she said was an improvement over the Ratio of 71:29 as at September 2018 “compared to the target of 60:40 in the Medium-Term Debt Management Strategy.”
The Ratio of Long Term to Short Term Debt in the Domestic Debt as at September 2019 was 80:20, which shows that the target of 75:25 had been outperformed by September 2019. Furthermore, it was an improvement over the Ratio of 73:23 recorded in September 2018.
Oniha stated that “total Debt as a percentage of GDP was 18.47 percent as at September 2019 was well within the limit of 25 percent and fares better in comparison with the Debt/GDP ratios of countries such as the United States of America, United Kingdom and Canada with ratios of 105 percent, 85 percent and 90 percent respectively for the same period.”
However, because they generate adequate revenues, their Debt Service/Revenue Ratios for the same period were much lower at 12.5 per cent, 7.5 per cent and 7.5 percent respectively when compared to Nigeria’s 51 per cent in 2017.
The low revenue base of Nigeria relative to its GDP is clearly reflected in the high Debt Service to Revenue Ratio and this is very important for the country to generate more revenue.
“The efforts towards increasing and diversifying revenue such as the passage of the Finance Act and Strategic Revenue Growth Initiative of the Federal Ministry of Finance, Budget and National Planning should thus be supported.” She recommended.
The DMO also unveiled its plans for the year 2020, based on the New Borrowings in the 2020 Appropriation Acts, which comprises of N850 billon and N744.99 billion for External and Domestic Borrowings respectively.
The New Domestic Borrowings will be raised through FGN Bonds, Sukuk, FGN savings Bonds and possibly Green Bonds. For External Borrowings the strategy is to first seek out concessionary and semi concessionary loans due to the lower interest rate and longer tenors. The Debt office added that any shortfall thereafter may be raised from commercial sources.
By Dipo Olowookere
Renewed buying interest raised the Nigerian Exchange (NGX) Limited by 0.33 per cent on Monday, with gains recorded in almost all the major sectors of the bourse at the close of transactions.
According to data harvested by Business Post, the insurance counter expanded by 0.62 per cent, the banking index grew by 0.59 per cent, the energy sector appreciated by 0.40 per cent, and the consumer goods space improved by 0.10 per cent, while the industrial goods segment closed flat.
When the closing gong was struck by 4 pm to signify the close of business on Customs Street, the All-Share Index (ASI) was up by 1,113.76 points to 243,707.07 points from 242,593.31 points, and the market capitalisation chalked up N714 billion to close at N156.308 trillion compared with the previous session’s N155.594 trillion.
Interest in Nigerian stocks yesterday resulted in a rise in the activity level, with the trading volume soaring by 17.86 per cent to 717.2 million units from 608.5 million units. The trading value advanced by 77.19 per cent to N56.7 billion from N32.0 billion, and the number of deals surged by 36.22 per cent to 73,321 deals from 53,826 deals.
FCMB was the busiest stock during the trading day, with a turnover of 152.3 million units worth N1.8 billion, Premier Paints exchanged 61.0 million units valued at N135.3 million, Dangote Cement traded 34.7 million units for N29.7 billion, The Initiates sold 32.8 million units worth N1.0 billion, and Jaiz Bank transacted 32.6 million units valued at N293.3 million.
Yesterday, the market breadth index was positive after the exchange closed with 37 price gainers and 28 price losers, representing strong investor sentiment.
International Energy Insurance gained 9.92 per cent to settle at N7.98, the Initiates added 9.91 per cent to its share price to quote at N32.15, ABC Transport garnered 9.68 per cent to trade at N6.80, Abbey Mortgage Bank grew by 9.63 per cent to close at N10.25, and Linkage Assurance soared by 9.36 per cent to N1.87.
On the flip side, Fidson Healthcare gave up 10.00 per cent to finish at N122.85, Academy Press crashed by 9.70 per cent to N7.45, RT Briscoe depreciated by 9.43 per cent to N13.45, SUNU Assurances tumbled by 9.37 per cent to N4.06, and Learn Africa decreased by 8.70 per cent to N10.50.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a marginal 0.05 per cent drop on Monday, June 8, depleting the market capitalisation by N1.27 billion to N2.606 trillion from N2.607 trillion, and cutting the Unlisted Security Index (NSI) by 2.12 points to 4,356.20 points from the previous 4,358.32 points.
The contraction witnessed during the session was triggered by a price loser, which overpowered that gains recorded by two securities on the trading platform.
Data indicated that MRS Oil Plc lost N6 at the close of business to settle at N165.00 per share compared with last Friday’s price of N171.00 per share.
Conversely, Lighthouse Financial Services Plc added 9 Kobo to sell at N1.03 per unit versus 94 Kobo per unit, and Central Securities Clearing System (CSCS) Plc appreciated by 8 Kobo to N78.48 per share from N78.40 per share.
The volume of securities traded by investors yesterday soared by 51.9 per cent to 213,188 units from 140,345 units, and the value of securities increased by 12.6 per cent to N20.2 million from N17.9 million, while the number of deals executed fell by 7.4 per cent to 25 deals from 27 deals.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion, and CSCS Plc with 64.8 million units exchanged for N4.4 billion.
GNI Plc also remained as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth 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 traded for N415.7 million.
By Adedapo Adesanya
The Naira opened the new trading week on a negative note on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEX) and the black market.
At the parallel market, the Nigerian currency weakened against the US Dollar by N5 to sell for N1,380/$1 compared with the preceding session’s rate of N1,375/$1, and at the GTBank FX desk, it shed N1 to trade at N1,373/$1 versus N1,372/$1.
At the official market, it lost 63 Kobo or 0.05 per cent against the Dollar during the session to close at N1,362.84/$1, in contrast to last Friday’s value of N1,362.21/$1.
However, the Nigerian Naira gained N2.30 against the Pound Sterling at the spot market yesterday, quoting at N1,821.29/£1 compared with the previous rate of N1,823.59/£1, and improved against the Euro by 23 Kobo to settle at N1,574.35/€1 versus N1,574.58/€1.
Data from the Central Bank of Nigeria (CBN) showed that interbank forex turnover increased to $92.248 million across 90 deals, from $73.565 million last Friday.
On the policy front, participants believed that the application of the fourth edition of the Foreign Exchange Manual of the central bank, which introduces updated guidelines for foreign exchange transactions and tightening compliance requirements for authorised dealers and market participants, will enhance market flexibility and ease previous restrictions.
Meanwhile, the cryptocurrency market snapped from recent declines, jolted by Strategy’s purchase of 1,550 Bitcoin for approximately $101 million, increasing its total holdings to 845,256 BTC. The company raised $181 million through common stock sales, using the proceeds to fund the bitcoin purchase and increase its cash reserves to $1 billion, pushing the price of the coin higher by 3.2 per cent to $63,731.69.
Cardano (ADA) appreciated by 8.4 per cent to $0.1738, Ethereum (ETH) rose by 5.2 per cent to $1,711.54, Solana (SOL) expanded by 5.1 per cent to $67.82, and Ripple (XRP) improved by 4.9 per cent to $1.18.
Further, Dogecoin (DOGE) jumped by 4.3 per cent to $0.0873, Binance Coin (BNB) soared by 2.7 per cent to $609.50, and TRON (TRX) increased by 0.7 per cent to $0.3274, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $0.9997 and $0.9998, respectively.
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