Economy
Nigeria Reduces Debt-to-GDP Ratio to 19%
By Dipo Olowookere
The debt-to-GDP (gross domestic product) ratio of Nigeria has slightly reduced to 19.00 per cent from 19.09 per cent within a period of 12 months, Business Post investigation has shown.
According to a document from the Budget Office sighted by Business Post, in 2019, the debt-to-GDP ratio, which measures the ability of the country to repay its debts when compared with the value of goods and services it produces, was trimmed to 19.00 per cent in 2019 from 19.09 per cent in 2018.
This newspaper gathered that in 2018, the total debt profile of the country, according to data obtained from the Debt Management Office (DMO), stood at N24.4 trillion, while the nominal GDP, as data from the National Bureau of Statistics (NBS) showed, was N127.8 trillion.
A year later, according to the debt office, the nation’s total debt profile rose to N27.4 trillion, while the nominal GDP was N144.2 trillion.
In 2017, the debt-GDP ratio of Nigeria was at 21 per cent, according to the then Minister of Finance, Mrs Kemi Adeosun, while speaking at an event in Ogun State, which took place in March 2018.
In recent times, there have been talks about the rising debt profile of Nigeria, especially under the present administration of President Muhammadu Buhari, who some observers said has a huge appetite for borrowing.
They claimed that with the present rate of borrowing, both from domestic and foreign sources, there would be a time Nigeria will not be able to payback.
One of the loans that got many people talking was the ones from China, a country most analysts said does not have mercy on loan defaulters, citing the experiences of Zambia, Djibouti and others as examples.
But the Nigerian authorities have said there’s nothing to fret about because the country, which is Africa’s largest economy and producer of crude oil, was capable of meeting its loan obligations.
Last Monday, the stats office said the country’s economy as measured by the GDP, contracted in the second quarter of 2020 by 6.10 per cent. This was in contrast to the 1.87 per cent growth achieved in the first quarter of this year.
The decline was largely attributable to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic.
But the presidency has asked Nigerians not to panic over the depression suffered by the nation’s economy in the second quarter of the year, saying when compared with other better economies, the country fared better.
According to the Special Adviser to the President on Media and Publicity, Mr Femi Adesina, “It also appears muted compared to the outcomes in several other countries, including large economies such as the US (-33 per cent), UK (-20 per cent), France (-14 per cent), Germany (-10 per cent), Italy (-12.4 per cent), Canada (-12.0 per cent), Israel (-29 per cent), Japan (-8 per cent), South Africa (projection -20 per cent to -50 per cent), with the notable exception of only China (+3 per cent).”
For the debt-to-GDP ratio, the Budget Office headed by Mr Ben Akabueze, the percentage “is within the country-specific debt limit of 40 per cent and below the maximum threshold of 55 per cent recommended by the International Monetary Fund (IMF) and the World Bank for countries in Nigeria’s peer group, as well as the West African Monetary Zone Convergence threshold of 70 per cent.”
Last month, the Mission Chief and Senior Resident Representative of the IMF for Nigeria, Ms Jesmin Rahman, projected that Nigeria’s debt-to-GDP ratio may rise to 36.5 per cent in 2020 as a result of the spike in government borrowing in the short-term, describing it as worrisome and should be closely monitored.
“We project this (debt-to-GDP ratio) to increase to 36.5 per cent this year, which is a jump and then stay around 38 per cent of GDP in the medium term,” she was quoted as saying during an interview hosted by Citibank Nigeria in collaboration with the American Business Council.
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.
