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Besides N41trn Public Debt, FG Owes CBN $47bn – Report
By Joseph Amah, Abuja
The federal government has confirmed that it was owing the Central Bank of Nigeria (CBN) N20 trillion ($47 billion), which is yet to be added to the country’s outstanding public debt, according to a report by the Budget Office of the Federation.
This is coming as a Think-Tank backed by the Bill & Melinda Gates Foundation is seeking $50 billion in aid to help debt-ridden African countries re-enter capital markets and avoid future defaults.
The debt figure was as of March 31, the Budget Office said, in a document, which gave the details of the country’s expenditure plans from 2023-2025.
The document was posted on the Budget Office’s website at the weekend.
Nigeria’s outstanding public debt is N41.6 trillion.This is even as Director General of the Debt Management Office, Mrs Patience Oniha raised the alarm that the nation’s high debt levels with a corresponding high debt service figures was a major constraint to further investments in the country’s deteriorating infrastructure.
Even with the additional obligations, the country remains “within Nigeria’s self-imposed” limit of 40 per cent debt to Gross Domestic Product (GDP), according to the report quoted by Bloomberg. The government plans to securitise its Ways and Means Advances (WMAs) from the CBN and revamp “it into a longer tenor amortising facility with a lower interest rate,” according to the Budget Office.
The country barely earned enough revenues to cover debt service payments in 2021, according to the budget office while in the first four months to April, government income of N1.63 trillion was less than the N1.94 trillion needed to cover debt-service payments, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed said, according to a presentation on the budget office’s website.
While the debt portfolio remains vulnerable to revenue and export shocks, “the challenges are being addressed by the government through its ongoing strategic revenue growth initiatives,” the report added.
Meanwhile, a think-tank backed by the Bill & Melinda Gates Foundation is seeking $50 billion in aid to help debt-ridden African countries re-enter capital markets and avoid future defaults.
The amount is an “average estimate,” said the President of the Paris-based Finance for Development Lab, which was launched last month, Daniel Cohen. Cohen, who is also President of the Paris School of Economics, said the money would be used to “enhance” credit quality by providing guarantees and helping African commodity exporters and importers hedge against price volatility.
Some African countries, which hit capital markets as global interest rates plunged to a record low, are on the verge of default due to the economic impact of the COVID-19 pandemic and Russia’s invasion of Ukraine, Bloomberg reported.Sovereign dollar bonds from African countries trade on average at 1,007 basis points above the US Treasury yield, meeting the widely accepted definition of a debt crisis.
The laboratory, which develops the proposals and wants an established body to hold the facility, includes representatives from the Steering Committee of the United Nations Economic Committee for Africa and think tanks from Santiago and Accra to New Delhi. World Trade Organisation (WTO) Director-General Ngozi Okonjo-Iwela attended its launch, the report said.
The Gates Foundation provided $2.6 million in September 2021 to start the project, the Bloomberg report recalled.
“Last year, we interacted with passionate thinkers from the Paris School of Economics who brought new ideas and energy to the funding debate – from Francophone Africa to the Paris Club to the private sector,” the foundation said in a response to questions.
“We jointly thought of a new organisation with the vision of creating an engaged community of think tanks and research centres that could help provide innovative, yet practical and evidence-based proposals meeting today’s financial challenges,” it added.
Cohen said he had begun talking to politicians, including French leaders, about contributions to the fund, noting that the contribution could come in the form of International Monetary Fund (IMF) special drawing rights.
The lab is proposing rolling interest-payment guarantees and loan-restructuring and facilitation facilities to provide cash “sweet” to creditors to cut the length and cost of restructuring negotiations, a document said.
Cohen said such a mechanism is necessary to help countries re-enter the market.
“Either they are locked out of the market or they can re-enter, provided they are enhanced by some sort of guarantee. Such a mechanism would be needed to restore access to the market. There will be a lot of restructuring in the coming years. Some cash can be a big advantage,” Cohen stressed.
The alternative is that countries locked out of capital markets will have to rely on grants and multilateral development banks for their financial needs, he explained.
The lab is also offering protection against commodity volatility by guaranteeing margin call payments triggered by rising prices, explaining that the laboratories also plan to develop relationships with Chinese academics as many African countries are indebted to China.
“We are thinking of a parallel group of Chinese scholars thinking about the role of China’s main creditor in Africa,” he said.
High Debt Weakening Investment in Infrastructure –DMO
.
The DG, Debt Management Office position was contained in a document presented during a workshop for civil society organisations organised by the SFTAS programme coordination unit held in Abuja entitled, ‘Why Debt Sustainability Is Important at the Subnational Level in Nigeria: Challenges and Prospects’ and a copy of it was obtained DAILY ASSET.
According to the DMO DG, “High debt levels lead to heavy debt service which reduces resources available for investment in infrastructure and key sectors of the economy.”
In the document, she stressed the need for debt sustainability, which she defined as the ability to service all current and future obligations, while maintaining capacity to finance policy objectives without resort to unduly large adjustments or exceptional financing such as arrears accumulation, debt restructuring, which could otherwise compromise its stability.
She added that, “A country’s public debt is considered sustainable if the government is able to meet all its current and future payment obligations without recourse to exceptional financial assistance or going into default.”
However, despite the high debt service, the DMO has constantly insisted on the sustainability of Nigeria’s rising debt, using the debt to Gross Domestic Product ratio as justification.
The International Monetary Fund (IMF) had earlier warned that debt servicing might gulp 100 per cent of the Federal Government’s revenue by 2026 if the government failed to implement adequate measures to improve revenue generation.
According to the IMF’s Resident Representative for Nigeria, Ari Aisen, based on a macro-fiscal stress test that was conducted on Nigeria, interest payments on debts might wipe up the country’s entire earnings in the next four years.
Aisen said, “The biggest critical aspect for Nigeria is that we have done a macro-fiscal stress test, and what you observe is the interest payments as a share of revenue and as you see us in terms of the baseline from the federal government of Nigeria, the revenue of almost 100 per cent is projected by 2026 to be taken by debt service.
“So, the fiscal space or the amount of revenues that will be needed and this without considering any shock is that most of the revenues of the federal government are now, in fact, 89 per cent and it will continue if nothing is done to be taken by debt service.”
However, The Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, recently disclosed that Nigeria’s debt service cost surpassed its revenue in the first four months of this year.
Debt service gulped N1.94tn between January and April 2022, against a retained revenue of N1.63tn.
A copy of the public presentation of the 2022 approved budget by the finance minister showed that the Federal Government allocated N3.32tn for debt servicing in 2021.
However, the minister’s presentation document showed that a total of N4.2tn was spent on debt servicing in 11 months, indicating a difference of N1.15tn or 37.9 per cent of the money allocated for debt servicing for the period.
In October last year, the finance minister, during an interview with Bloomberg TV, said, “Our debt service to overall revenue is high because we have a very large expenditure base. We have a large proportion of our budget dedicated to payroll, and Mr President had decided from the beginning of his administration that we were not going to disengage staff.
“So, you have to pay salaries, you have to pay pensions. And also, we have to fund the other arms of government, which are the judiciary and the legislature.”
By Mike Odiakose, Abuja
Immediate past governor of Kogi State, Yahaya Bello will spend the 2024 Christmas and 2025 New Year days in Kuje prison, Abuja, following refusal of his bail application by the Federal Capital Territory High Court.
Justice Maryann Anenih yesterday adjourned the case until Jan.
29, Feb. 25, and Feb. 27, 2025 for the continuation of the hearing.The former governor is standing trial, along with two others, in an N110 billion money laundering charge brought against him by the Economic and Financial Crimes Commission (EFCC).
Justice Anenih had refused to grant a bail application filed by Bello, saying it was filed prematurely.
The judge admitted Umar Oricha and Abdulsalam Hudu, to bail in the sum of N 300 million each with two sureties.
Justice Anenih, while delivering a ruling said, having been filed when Bello was neither in custody nor before the court, the instant application was incompetent.
“Consequently, the instant application having been filed prematurely is hereby refused,” she said.
Recalling the arguments before the court on the bail application, the judge had said, “before the court is a motion on notice, dated and filed on Nov. 22.
“The 1st Defendant seeks an order of this honourable court admitting him to bail pending the hearing and determination of the charge.
“That he became aware of the instant charge through the public summons. That he is a two-term governor of Kogi State. That if released on bail, he would not interfere with the witnesses and not jump bail.”
She said the Defendant’s Counsel, JB Daudu, SAN, had told the court that he had submitted sufficient facts to grant the bail.
He urged the court to exercise its discretion judicially and judiciously to grant the bail.
Opposing the bail application, the Prosecution Counsel, Kemi Pinheiro, SAN, argued that the instant application was grossly incompetent, having been filed before arraignment.
He said it ought to be filed after arraignment but the 1st Defendant’s Counsel disagreed, saying there was no authority
“That says that an application can only be filed when it is ripe for hearing.”
Justice Anenih held that the instant application for bail showed that it was filed several days after the 1st defendant was taken into custody.”
Citing the ACJA, the judge said the provision provided that an application for bail could be made when a defendant had been arrested, detained, arraigned or brought before the court.
Bello had filed an application for his bail on November 22 but was taken into custody on November 26 and arraigned on Nov. 27.
From Jude Dangwam, Jos
Conference of Autochthonous Ethnic Nationalities Community Development Association (CONAECDA) has called on the federal government to intensify efforts in the resettlement of displaced persons in their ancestral homes.
The organization made this call at the end of its conference held in Jos, the Plateau State Capital weekend.
Thirty resolutions were passed covering security, economy, politics, governance, culture, languages, human rights and indigenous peoples’ rights among others.
The Conference President, Samuel Achie and Secretary Suleman Sukukum in a communique noted that the conference received and discussed reports from communities based on which resolutions were reached on securing, reconstruction, rehabilitation and returning communities displaced by violence across the Middle Belt.
“After considering the reports from communities displaced by violent conflicts, conference resolved, and called on government to focus on providing security to deter further displacements.
“Call on government to provide security to enable communities to return. Government and donor partners should assist in reconstructing and returning displaced communities,” the communique stated.
The GOC 3 Armoured Division Nigeria Army represented by Lt Col Abdullahi Mohammed said the Nigerian Army is committed to working closely with communities to achieve a crime-free society, urging communities to support them with credible information.
“Security is a collective effort, and we cannot do it alone, the community plays a crucial role in ensuring safety.
“We urge everyone here not to shield or protect individuals involved in criminal activities. Transparency and collaboration, together, with maximum cooperation, we can achieve peace, security, and prosperity for our society,” the GOC stated.
The National Coordinator of CONECDA, Dr. Zuwaghu Bonat in his address at the gathering noted that the theme of this year’s program, Returning, Resettling, and Rehabilitating Displaced Communities, was chosen as a wakeup call on the federal government.
He maintained that the organization is aware that President Bola Tinubu has expressed a commitment to ensuring that displaced communities return to their ancestral lands.
He said similarly, some state governments, including Plateau State, have set up committees to address the lingering matter.
The coordinator however cautioned, “It is critical that we avoid generalizations or profiling. For instance, Not all Muslims are involved in terrorism. The overwhelming majority of Muslims in Nigeria are peaceful and reject extremist ideologies.
“We also know that some terrorists exploit religion to mobilize support or rationalize their actions. However, their atrocities – slaughtering women, cutting open pregnant mothers, and killing children show a profound disregard for humanity and God. Normal human beings would not commit such acts.
“We must also be cautious about lumping banditry with terrorism. While statistics indicate that many bandits and kidnappers may share similar ethnic backgrounds, kidnapping has now evolved into a profit-driven enterprise. This distinction is vital to address the root causes effectively,” he stated.
The Governor of Plateau State, Caleb Mutfwang represented by his Senior Special Assistant (SSA) on Middle Belt Nationalities, Hon Daniel Kwada noted that the conference was apt to addressed the various underlying issues bedeviling the region and its people.
“We in the Middle Belt have long been standing at the crossroads of Nigeria’s complex history. Despite our tireless efforts to stabilize this nation, we have faced immense challenges, including underdevelopment, security issues, and marginalization.
“Often, we are unfairly maligned, but gatherings like this offer a chance to change the narrative.
“Such conferences set the tone for better discussions. They allow us to drive processes that bring development, ensure security, and elevate our people to greater heights,” Mutfwang noted.
Securities and Exchange Commission (SEC) has called on banks to reinforce their corporate governance principles and risk management frameworks to boost investor confidence during the ongoing recapitalisation exercise.
Dr Emomotimi Agama, Director-General, SEC, said this at the yearly workshop of the Capital Market Correspondents Association of Nigeria (CAMCAN) held in Lagos.
The theme of the workshop is: “Recapitalisation: Bridging the Gap between Investors and Issuers in the Nigerian Capital Market”.
Agama, represented by the Divisional Head of Legal and Enforcement at the SEC, Mr John Achile, stated that the 2024–2026 banking sector recapitalisation framework offers clear guidance for issuers while prioritising the protection of investors’ interests
He restated the commission’s commitment towards ensuring transparency and efficiency in the recapitalisation process.
The director-general stated that the key to bridging the gap between issuers and investors remained the harnessing of innovation for inclusive growth.
In view of this, Agama said, “SEC, through the aid of digital platform, is exploring the integration of blockchain technology for secure and transparent transaction processing to redefine trust in the market.”
He added that the oversubscription of most recapitalisation offers in 2024 reflects strong investor confidence.
To sustain this momentum, the director-general said that SEC had intensified efforts to enhance disclosure standards and corporate governance practices.
According to him, expanding financial literacy campaigns and collaborating with fintech companies to provide low-entry investment options will democratise access to the capital market.
He assured stakeholders of the commission’s steadfastness in achieving its mission of creating an enabling environment for seamless and transparent capital formation.
“Our efforts are anchored on providing issuers with clear guidelines and maintaining open lines of communication with all market stakeholders, reducing bureaucratic bottlenecks through digitalisation.
“We also ensure timely review and approval of applications, and enhancing regulatory oversight to protect investors while promoting market integrity,” he added.
Agama listed constraints to the exercise to include: addressing market volatility, systemic risks, limited retail participation as well as combating skepticism among investors who demand greater transparency and accountability.
He said: “We are equally presented with opportunities which include leveraging technology to deepen financial inclusion and enhance market liquidity.
“It also involves developing innovative financial products, such as green bonds and sukuk, to attract diverse investor segments.
“The success of recapitalisation efforts depends on collaboration among regulators, issuers, and investors.”
Speaking on market infrastructure at the panel session, Achile said SEC provides oversight to every operations in the market, ranging from technology innovations to market.
He stated that the commission is committed to transparency and being mindful of the benefits and risks associated with technology adoption.
Achile noted that SEC does due diligence to all the innovative ideas that comes into the market to ensure adequate compliance with the requirements.
On the rising unclaimed dividend figure, Achile blamed the inability of investors to comply with regulatory requirements and information gap.
He noted that SEC had done everything within its powers to ensure that investors receive their dividend at the appropriate time.
He, however, assured that the commission would continue to strengthen its dual role of market regulation and investor protection to boost confidence in the market.
In her welcome address, the Chairman of CAMCAN, Mrs Chinyere Joel-Nwokeoma, said banks’ recapitalisation is not just a regulatory requirement, but an opportunity to rebuild trust, strengthen the capital market, and drive sustainable growth.
Joel-Nwokeoma stated that the recent recapitalisation in the banking sector had brought to the fore the need for a more robust and inclusive capital market.
She added that as banks seek to strengthen their balance sheets and improve their capital adequacy ratios, it is imperative to create an environment that fosters trust, transparency, and cooperation between investors and issuers.
The chairman called for collaboration to bridge the gap between investors and issuers to create a more inclusive and vibrant Nigerian capital market.She said: “we must work together to strengthen corporate governance and risk management practices in banks, enhance disclosure and transparency requirements for issuers.” NAN
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