Economy
Nigeria Still Safe to Borrow Additional N7.9trn—FSDH
By Dipo Olowookere
Some days ago, the Debt Management Office (DMO) released the public debt profile of the country and from their report, Nigeria’s debt stood at N24.4 trillion as at December 31, 2018.
The release of the report stirred another debate in the country, with different stakeholders appealing to federal government to reduce its borrowings.
But analysts at FSDH Research have said Nigeria still has room to borrow an additional N7.89 trillion before reaching a threshold of about N32 trillion.
In its report released this week, which was obtained by Business Post, the Lagos-based investment company said based on the fact that the public debt-to-GDP ratio of Nigeria, Africa’s largest economy, was still under 20 percent, precisely 18.89 percent, it can still get more loans to reach the 25 percent benchmark set for itself and the 56 percent international threshold set for countries in Nigeria’s peer group.
FSDH Research argued that countries like China, South Africa, India, UK and USA all have high debt-to-Gross Domestic Product (GDP) of over 50 percent, but stressed that they have successfully managed to deploy their borrowings into activities that can stimulate revenue generation including education, transportation, construction, security, technology, and other growth-enhancing infrastructure.
“By utilizing these borrowed funds in areas that improve the ease of doing business in their countries, they have been able to grow their economies further, create job opportunities, and create more avenues for their governments to grow their revenue,” the report said.
It advised the Nigerian government to diversify its revenue and create multiple sources so as to change the present narrative.
“Just as FSDH Research has suggested several times in our previous reports, there is an urgent need to expand the revenue base of the country through the growth of the non-oil sector.
“We suggest that the government should adopt strategies to increase and broaden its revenue. Some of these strategies include an increase in the tax base of the country (apart from an increase in the tax rate), removal of all administrative delays in obtaining licences and approvals (including titles to landed properties for building and agricultural purposes), the sale of unprofitable government assets and, removal of subsidies on electricity and Premium Motor Spirit (PMS).
“In addition, we emphasize that borrowing should be tied to specific projects that can improve the competitiveness of the country, such as the FGN Sukuk Bond.
“To conclude, as individuals and business entities in Nigeria, we can help government generate more revenue by paying our taxes and other dues as and when due. And government must surely reciprocate with the provision of appropriate facilities that will make life better for all,” it said.
Read the full report below
Have you ever had to borrow money and accumulate debt? Some individuals believe that debt is bad and as a result they live within their limited resources. But are debts really bad? Now, imagine that you run a chocolate-production business and you receive a large order to supply chocolates to a big customer who will surely pay you after supply.
After considering your resources, you find out that you do not have sufficient funds to purchase the raw materials required to produce the chocolates.
You are then faced with a decision to either borrow money from a willing lender to finance the operation and make your money later or not to borrow and lose the business. What will you do? It is your choice to make but borrowing is definitely a better option if the money is used for productive activities that have the capacity to pay back the debt as well as its associated interest.
Just as individuals and companies are faced with the dilemma of whether or not to borrow, countries also face the same problem.
Although it is difficult to find any country that does not borrow, there are key questions each country must ask. How much debt should they contract? What projects will the debt be used for? How will the loan be repaid on top of the associated interest? Whom should they approach to lend the money? What will be the impact of the loan servicing on the country’s ability to perform her obligations to the citizens? Some countries have shown that debt is not bad in itself. What truly matters is the productivity of the debt that is contracted.
Countries such as China, South Africa, India, UK and USA have high Debt-to-Gross Domestic Product (GDP) of over 50%. Our computation shows that despite the significant increase in Nigeria’s public debt in recent years, standing at N24 trillion, Nigeria’s Public Debt-to-GDP ratio is less that 20%. Based on this measure, Nigeria could borrow more.
The countries mentioned above, however, have managed to deploy their borrowings into activities that can stimulate revenue generation including education, transportation, construction, security, technology, and other growth-enhancing infrastructure. By utilizing these borrowed funds in areas that improve the ease of doing business in their countries, they have been able to grow their economies further, create job opportunities, and create more avenues for their governments to grow their revenue.
So, you might now be thinking, maybe debt is not bad after all. But, you must not be quick to say this. The matter of public debt must be weighed carefully and thoroughly. Just as there are countries that have done well because of increased borrowing, there are other countries whose high, unsustainable debt levels have not translated into economic development.
In reviewing Nigeria’s debt profile, FSDH Research observes that the level of debt has been on the increase over the years. As at December 2018, the total public debt increased to N24.39trillion. But this is not where the issue lies.
A further analysis shows that the Public Debt-to-GDP ratio is 18.89%, which is below the 25% benchmark the Federal Government of Nigeria (FGN) sets for Nigeria and the 56% international threshold set for countries in Nigeria’s peer group.
The 25% benchmark gives Nigeria a leeway to borrow an additional N7.89 trillion given her level of GDP. But before you are quick to celebrate, there is the need to consider one very important factor: the ability of the country to service the debt without causing untold hardship on the country.
In measuring the ability of a country to service her debt obligations, we look at the ratio of domestic debt service-to-FGN FAAC allocation.
This is where the problem lies for Nigeria. Low revenue generation makes it very difficult for the FGN to meet its debt obligations without sacrificing other important responsibilities of government.
FSDH Research notes that the current high debt service to revenue structure in Nigeria is unsustainably high and the high figure is due to the low revenue of the country. Although the strategies of the Debt Management Office (DMO) in debt management and the Central Bank of Bank of Nigeria (CBN) in monetary policy administration have reduced the interest burden of the government, Nigeria needs to accelerate revenue generation to enable it to meet all her debt obligations without stress.
The way to change this narrative is for Nigeria to diversify her revenue and create multiple sources. Just as FSDH Research has suggested several times in our previous reports, there is an urgent need to expand the revenue base of the country through the growth of the non-oil sector.
We suggest that the government should adopt strategies to increase and broaden its revenue. Some of these strategies include an increase in the tax base of the country (apart from an increase in the tax rate), removal of all administrative delays in obtaining licences and approvals (including titles to landed properties for building and agricultural purposes), the sale of unprofitable government assets and, removal of subsidies on electricity and Premium Motor Spirit (PMS).
In addition, we emphasize that borrowing should be tied to specific projects that can improve the competitiveness of the country, such as the FGN Sukuk Bond.
To conclude, as individuals and business entities in Nigeria, we can help government generate more revenue by paying our taxes and other dues as and when due. And government must surely reciprocate with the provision of appropriate facilities that will make life better for all.
By Adedapo Adesanya
The Senate Committee on Banking, Insurance and Other Financial Institutions has called for stronger collaboration among financial sector regulators and other stakeholders to strengthen Nigeria’s financial system and support sustainable economic growth.
The committee made the call during an expanded stakeholders’ engagement in Lagos, attended by the leadership of the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), Asset Management Corporation of Nigeria (AMCON), National Insurance Commission (NAICOM) and Nigeria Export-Import Bank (NEXIM), among other industry stakeholders and financial experts.
Chairman of the committee, Mr Adetokunbo Abiru (Lagos East), who was represented by Mr Osita Izunaso (Imo West), said stronger legislative reforms and regulatory collaboration were necessary to reposition Nigeria’s financial architecture for long-term economic prosperity.
Mr Abiru said the financial sector remained critical to investment, job creation, business expansion and macroeconomic stability, stressing that its ability to mobilise savings, channel credit to productive sectors, facilitate investment and manage risks was fundamental to sustainable economic growth.
He said the current economic realities required closer collaboration between the legislature and financial regulators, noting that challenges confronting the sector were interconnected and could not be effectively addressed through isolated interventions.
The lawmaker identified inflationary pressures, global economic uncertainties, cybersecurity threats, low insurance penetration and the need to diversify Nigeria’s export base as some of the challenges requiring coordinated policy responses.
He said the engagement was aimed at generating practical solutions to strengthen the country’s financial architecture and support sustainable economic growth.
According to him, monetary policy, financial safety nets, banking institutions, the insurance industry and export finance were interdependent components of a stable financial system and must therefore be strengthened collectively.
The Commissioner for Insurance and Chief Executive Officer of the National Insurance Commission (NAICOM), Mr Olusegun Ayo Omosehin, said the Nigeria Insurance Industry Reform Act (NIIRA) 2025 had contributed significantly to stabilising and repositioning the insurance sector.
Mr Omosehin disclosed that 43 insurance companies had successfully recapitalised, describing the development as a major milestone for the industry.
He commended Abiru and members of the committee for their role in advancing insurance sector reforms and urged the House of Representatives to expedite action on the relevant insurance reform bill to enable it to receive presidential assent and become operational.
Representatives of the CBN Governor and the Managing Directors of AMCON, NEXIM and NDIC also commended the Senate committee for its oversight and legislative support, saying its interventions had strengthened the agencies’ capacity to discharge their statutory mandates.
The engagement, held under the theme, Strengthening Financial System Architecture for Sustainable Economic Growth and Stability in Nigeria, also featured presentations by Professor Uche Uwaleke, President of Capital Market Academics of Nigeria (CMAN); Professor Biodun Adedipe, Chief Consultant, B. Adedipe Associates Limited; and Dr Tilewa Adebajo, Chief Executive Officer of CFG Advisory.
The experts presented policy recommendations on key issues affecting Nigeria’s financial system, with emphasis on financial stability, investment and sustainable economic growth.
Mr Abiru said the Senate would continue to engage financial regulators and other stakeholders to deepen financial inclusion, strengthen public confidence in financial institutions and improve regulatory effectiveness.
He said the broader objective was to position Nigeria’s financial system to compete more effectively in the global economy while remaining resilient and responsive to the country’s economic transformation agenda.
By Aduragbemi Omiyale
The first six months of 2026 were not too good for Caverton Offshore Support Group Plc, as it suffered an N8.7 billion loss compared with the N2.1 billion net profit it recorded in the same period of 2025.
This occurred as the company posted a 10.91 per cent decline in earnings between January and June 2026, according to its financial statements for the period ended June 30, 2026.
Analysis of the results showed that the revenue generated in the period under review stood at N14.7 billion versus the N16.5 billion printed in the corresponding period of last year.
Business Post observed that the revenue was negatively impacted by a decline in earnings from helicopter charter and helicopter/airplane contract.
Further analysis of the financial results indicated that operating profit went down by 22.34 per cent to N7.3 billion from N9.4 billion, with administrative expenses jumping to N7.9 billion from N4.7 billion.
But Caverton believes things will get better, noting that the clearest driver of the recovery is Caverton Marine.
Through its relationship with Stena Bulk, one of the world’s leading tanker operators, the organisation now participates in three Suezmax tankers trading a rare source of foreign-currency revenue for a Nigerian-listed company.
It noted that the relationship is being deepened through Unity Shipping Worldwide, a joint venture with the Nigerian National Petroleum Company (NNPC) Limited and Stena Bulk that pairs the state-owned oil firm’s national position and Stena Bulk’s fleet with Caverton’s indigenous operating platform
Closer to home, the firm’s OMIBUS platform, developed with Shanghai-based electric-propulsion OEM Explomar, is bringing battery-electric passenger ferries to Lagos waterways. A prototype is already in service, and Caverton holds a firm order from Lagos State for ten vessels, an early-mover position in clean inland-water transport that the group believes can be replicated across other states as the fleet enters service and ferry operations mature into steady, recurring revenue.
In aviation, the institution said the recovery is anchored on its partnership with NHV, a Belgium-based international helicopter operator, with the restructuring of charter operations targeted for the second half of 2026.
“The first half of the year tested us, but the direction of travel is now visible in the numbers.
“Quarter on quarter, we are working to build up our revenue to narrow losses. Our marine business units, from international tankers to electric ferries, are scaling.
“Meanwhile, our aviation relaunch is on track for the second half, and our cost base is tighter than it has been in years. There is distance still to travel, but Caverton is moving from stabilisation to recovery, and we intend to finish 2026 with that momentum intact,” the chief executive of Caverton, Mr Olabode Makanjuola, stated.
By Adedapo Adesanya
The Nigeria Revenue Service (NRS) and the Joint Revenue Board (JRB) have issued new guidelines clarifying the taxation of virtual assets in Nigeria.
The guidelines provide an administrative framework for the taxation of virtual assets and specify the tax obligations of individuals and businesses operating in the sector.
According to a public notice issued by the two agencies, the framework covers registration, reporting and record-keeping requirements, valuation principles and the tax treatment of virtual asset transactions.
It applies to taxpayers, Virtual Asset Service Providers (VASPs), peer-to-peer (P2P) marketplace operators, tax practitioners and other persons engaged in virtual asset-related activities.
The NRS and JRB said the guidelines were developed in line with the provisions of the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025.
The two bodies said the release was aimed at providing clarity, certainty and consistency in the administration of Nigeria’s tax laws as the country’s virtual asset ecosystem continues to evolve.
The agencies added that the framework would promote voluntary compliance, enhance transparency and support the development of a fair and efficient tax system for digital asset transactions.
They urged all affected taxpayers and stakeholders to familiarise themselves with the guidelines and ensure compliance with the applicable tax obligations.
The guidelines are available on the official websites of the two agencies.
