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Tag: Debt

  • Nigeria huge debt service and meagre revenue – Saad Shuaib

    Nigeria huge debt service and meagre revenue – Saad Shuaib

    By Saad Yushau Shuaib,

    I read with keen interest and undivided attention a news story titled, “Debt servicing gulps N8trn as FG seeks more loans,” on the front page of DailyTrust newspaper of Friday, November 1, 2019. In the story, the newspaper reported that President Muhammadu Buhari’s government had so far spent about N7.9 trillion to service both domestic and foreign debts it incurred in five years – from 2015 to 2019, saying the analysis of the country’s budgets in five years has shown.

    The N7.9trn which was captured in the country’s annual budgets in the last five years showed that in 2015, the FG spent N943 billion for debt servicing. Then, it spent N1.36trn in 2016 and N1.66trn in 2017. The analysis also revealed that in 2018, the FG spent N2.23trn on debt servicing, while in 2019 it had so far spent N2.14trn.

    For the “laymen” who may not know, what “debt servicing” is all about. And may not have heard of something called “National Debt Service”.

    Now, this is it: the National debt is the total amount of capital Federal Government has borrowed and, therefore, owes to creditors or back to itself, while national debt service is the amount of instalment payment made over a given period to pay for the interest and principal of an existing loan, secured by a country.

    Indeed, national debt is a very important fiscal element of a country’s financial system. Most countries across the world borrow funds to meet their financing needs and close their budget deficit. But it is quite unfortunate that our Nigerian government(s) have always accorded a scant regard securing ‘bogus’ loans. Do they even consider the implications of the long-term (especially) loans?

    At the moment, our FG, under the leadership of President Buhari is still seeking fresh loans despite the huge debts that have accrued over the years. This is quite unfortunate and worrisome, as an ever-increasing national debt hinders economic growth.

    Earlier in June this year, the African Development Bank (AfDB), in its West Africa Economic Outlook 2019, said debt servicing gulps more than 50 percent of Nigeria’s revenue.

    According to AfDB, the average revenue spent by West African countries on external debt servicing is 17 percent. This is high and even higher in Nigeria which spends about 50 percent revenue on external debt servicing.

    It added that with the increasing domestic debt burden, the percentage of revenues spent on debt servicing in Nigeria was even higher. The bank said that even though the country’s debt burden had increased by as much as 128 percent in the last eight years, Nigeria’s debt to Gross Domestic Product (GDP) remained low. The low debt-to-GDP ratio notwithstanding, it added that the problem with the nation’s increasing debt burden was the high proportion of revenue spent on debt servicing.

    The bank said: “In Nigeria, about half of the revenue is used to service external debt. The increasing domestic debt burden means that the total proportion of the revenue spent on servicing debt is even higher. In a country where only six percent of GDP is collected in revenue, the high burden of debt service is a major concern.”

    The AfDB said for countries moving from low-income status to middle-income status like Nigeria, the possibility of accessing concessional debt or increasing the proportion of grants appeared remote.

    Many financial experts have raised concerns of how the burden of servicing huge debts is becoming overwhelming for the country to handle.

    They are of the view that if such enormous debts keep amassing, Nigeria will get to a point where all it does is to generate revenue to service debts.

    Speaking on the foreign loans secured by FG, Sarah Anyawu, a Professor of Development Economics at the University of Abuja, said not all borrowings should be considered good, and that government should borrow externally only for projects with guaranteed return on investment, so as to be able to pay back the loans.

    However, in Nigerian contest, the reverse seems the case as the government, most times, borrow money to pay salaries, fund social infrastructure that are hardly geared towards return on investments. It would be recalled vividly that during the administration of former President Goodluck Jonathan, in 2014 to be precise, a loan was secured solely to pay for civil servants’ salaries. What a drawback!

    While sourcing for loans is entirely not bad, but, among other things, the government should be transparent in judiciously utilising approved loans for aggressive infrastructural developmental that will in the long run transform the country’s economy, while also enhancing the masses’ standard of living.

    Not loans that will find their way to the pockets of our “corrupt” government officials, families and cronies.

    Saad Yushau Shuaib

    Wuye District, in Abuja.

    saadushuaib@yahoo.com

  • Pay your debts with 2019 budget proposals, Reps tell NDDC

    The House of Representatives has directed the Niger Delta Development Commission (NDDC) to settle all it’s liabilities with its 2019 budget proposals.
    This disclosure was revealed when the NDDC Interim management led by the Acting Managing Director presented the Commission’s 2019 budget before the House Committee on NDDC on Tuesday.
    Recall that, the House had resolved that, it will only consider its 2019 budget for implementation and later act on its 2020 budget proposal.
    Speaking, Chairman of the Committee, Olubunmi Tuni-Ojo (APC, Ondo) lamented that, the Committee has failed to implement its 2019 budget due to widespread infractions and untoward practices by its former management.
    He said that, although it was no fault of the new management, but the House is concerned with the rot in the Commission which has deprived the people of Niger Delta of the needed development.
    He said that, as part of the measures to implement the recommendations made by the committee on the NDDC 2019 budget, the Commission must present the list of all contractors being owed.
    Tunji-Ojo however disclosed that, payment to claims would only be made after a through verification and approval of the committee.
    The chairman of the committee also said that, the NDDC must also recover the over N1 trillion it is being owed by various entities to help it offset the liabilities.
    He informed the management that, the committee will present the findings of the public hearing to the House.
    He added that, when approved by the House, all ongoing projects in the NNDC 2019 budget will be rolled over to the Commission’s 2020 budget which will be considered after the approval of its 2019 budget.
    The Committee chairman lamented that, due to the mess in the NDDC, the commission was 14 months behind schedule in its 2019 budget implementation which he said was a huge drawback.
    In her presentation to the committee,the Acting NDDC Managing Director, Mrs Osato Iyasere Arenyeka disclosed that, N346,513,046,220 was proposed by the NDDC as 2019 budget based on assumption of improved revenue inflow.
    She however disclosed that, as at December 2018, the aggregate revenue inflow was N291.47 billion.
    “The Overhead expenditure (Personnel, Recurrent and Internal Capital) elapses December 31st similarly, (N35.07bn) N35,079,320,850 representing 99.8% was spent. The Capital expenditure (Development Project) elapsed July 31st 2019 while (N255.09bn) N255,096,800,000 representing 82% was spent during the review year. The Commission recorded 83% on its performance for 2018”.
    Shedding more light on the findings about infractions in the NDDC, the Acting MD informed that, the new management has uncovered bogus claims on projects by various contractors.
    Mrs Ayenreka noted that, many fake IOCs were discovered by the Commission in the course of its investigations adding that many contracts were duplicated through state governments, NDDC, FERMA and other agencies.
    She said that many contractors have also been issued certificates for projects not executed saying that, the Commission will fish out persons that authorised or issued the certificates.
    She said that, the NDDC has resolved to suspend all emergency contracts awarded by the NDDC as most of them did not follow the laid down procedures and due process.
    She added that, reforms to involve the people of the region to take ownership of the projects and ensure their proper execution is underway as people are being encouraged to go back home to invest and be involved in the development of the region.
    According to her, the move was to aligned with President Muhammadu Buhari’s reforms to ensure transparency in the activities of the NDDC to serve the people of the Niger Delta region.
    Speaking after the budget presentation by the Acting NDDC MD, Chairman of the committee advised the Commission to lower its revenue projection in its proppsed 2020 budget to make it realistic.
    He also advised against the suspension of all emergency projects as according to him, the emergency projects serve as the quickest lifeline to the people of the Niger Delta that meets their immediate infrastructural and other needs.
  • Nigeria’s N25.7tr debt not worrisome – Finance Minister

    Nigeria’s N25.7tr debt not worrisome – Finance Minister

    There is nothing worrisome about Nigeria’s debt portfolio, Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said on Wednesday.

    She said foreign and domestic debt stock notwithstanding, Nigeria does not have a debt crisis.

    Nigeria’s domestic and external debt portfolio stood at N25.7 trillion (about $83.88 billion) as at June 30, according to the country’s ‘Total Public Debt Portfolio’ obtained from Debt Management Office (DMO) website.

    The DMO said the current total debt stock comprises the federal and 36 states and the Federal Capital Territory (FCT).

    The minister spoke against growing concerns from some quarters that the country was inching towards debt crisis as servicing the debts might cripple the implementation of projects.

    Mrs. Ahmed, however, explained that the issue Nigeria is contending with could rather be termed a revenue generating problem and not a debt crisis.

    Former Chartered Institute of Bankers of Nigeria (CIBN) President Okechukwu Unegbu also urged Nigerians to stop having sleepless nights over the rising debt stock.

    The minister, who spoke on Wednesday at the National Assembly hearing on the N10.33 trillion 2020 Budget, said: “We have heard repeatedly that Nigeria is inching towards a debt crisis and we have consistently said that Nigeria does not have a debt crisis. Our total borrowing rate is just under 50 per cent of our GDP, while the multilateral institutions project for a country to borrow from 50 to 55 per cent of the Gross Domestic Product (GDP).

    “What we have, is a revenue problem. Our revenue performance by half year is 58 per cent. So, we have designed this Strategic Revenue Growth Initiative early this year, which has three thematic areas.”

    Mrs. Ahmed said one of the objectives is to achieve sustainability in revenue generation; and the second is to identify enhanced enforcement alongside existing revenue streams; and the third is to achieve cohesion “of our people and tools.”

    She added: “There is also the need for us to ensure that we have the right legal enablers and other enablers that will enhance revenue performance.

    “Nigeria as a country must mobilise significant domestic resources to be able to make necessary investment in human capital as well as in physical infrastructure.”

    Ahmed said that, given the low revenue to GDP ratio currently at per cent, the country must optimise revenue generation.

    She said: “I will like to use this opportunity to call on the Nigerian public to support this administration in solving Nigeria’s revenue generation generation problem. Indeed, some reforms are tough but we have to take some actions.

    “However, we will engage the public in whatever we do in support of the National Assembly including any changes in tax laws, if it is necessary.

    “We also will be holding town hall meetings, various stakeholders’ fora to discuss matters that will affect citizens.”

    Unegbu said: “Now that having a deficit budget is becoming a regular phenomenon, it is almost inevitable not to borrow.

    “Having a deficit budget has always been a concern, but using debt to fund ailing infrastructure is one of the best alternatives for us to open up the economy.”

    Speaking on Nigeria’s rising domestic and foreign debts at the just concluded 2019 World Bank/ International Monetary Fund (IMF) Annual Meetings held in Washington D.C , Financial Counselor and Director, Monetary and Capital Markets Department at IMF, Tobias Adrian, said rising borrowing and debt service costs are big challenge, facing Nigeria.

    He said borrowing at high rates makes it difficult for the country to pay back and also increase the debt service costs, which is dangerous for economic growth.

    Warning Nigeria against taking loans from non-Paris Club creditors, especially China, he said: “The issue of borrowing from non-Paris Club creditors has been identified as potentially creating some instability or some vulnerabilities in the debtor countries.

    “Not that the debt itself creates problems, but they have to be used for productive purposes. Usually, debt given under non-Paris Club or multilateral types of agreements to low income countries, particularly a lot of sub-Saharan African countries, have led to debt vulnerabilities.”

    Asked to choose between domestic and foreign borrowing, Adrian noted that both domestic and external debts markets are important for economic growth and development and both markets should be well developed.

    He said: “So, borrowing can be helpful for economic growth and investment, but it can also be dangerous when negative shocks arise. So, we have done a lot of work in the IMF on debt sustainability and debt management and we have a host of recommendations on how to manage debt in a responsible manner.”

  • Finance Minister counters DMO, says Nigeria’s debt more than N25.7tn

    Finance Minister counters DMO, says Nigeria’s debt more than N25.7tn

    The Minister of Finance, Budget and National Planning, Zainab Ahmed, on Thursday said there are debts owed by states and government enterprises that have not been captured in the N25.7 trillion recently declared as total national debt.

    Ahmed made this known during a panel discussion on Debt Transparency at the ongoing World Bank/IMF Annual Meetings in Washington, United States.

    This revelation is coming two days after the Debt Management Office (DMO) published a summary of the nation’s debt as at June 30.

    The minister disclosed plans by the government to produce a more comprehensive debt database with emphasis on providing detailed breakdown of projects related to borrowings.

    “Going forward, we want to scan the environment and have a good database of all the debts that government owes, whether at the sovereign or subnational level.

    “Also, we are trying to capture debts of the state-owned enterprises, and debts we owe local creditors.

    “We want to be able to show more clearly debts that are related to specific projects like debts that we owe to countries like China.

    “Right now, they are reported as part of the public debt but there is no detailed drill down to show the projects tied to them,” she said.

    Ahmed said the move was partly in response to increasing demand from the civil society and the Nigerian public for more transparency in the system.

    She, however, enumerated measures currently in place to ensure transparency in government’s borrowing and debt management.

    The minister explained that all government borrowings were subject to legislative approval conducted in a transparent manner.

    “Nigeria also publishes quarterly data (sovereign and sub-national) as well as the composition of external and domestic debt.

    “In addition, it publishes its Debt Management Strategy, Debt Sustainability Analysis and National Debt Management Framework, and all these are available at the DMO website,” she said.

    She highlighted the benefits of transparency in the system to include helping local and foreign investors, and multilateral and bilateral creditors with their investment and lending decisions.

    The Federal Government, according to the minister, is also undertaking a major programme to assist states with grants and technical assistance to strengthen their fiscal transparency, accountability and sustainability.

    She said the government was embarking on the programme with the support of a 750-million-dollar World Bank financing using the bank’s Programme-for-Results instrument.

    According to her, the initiative will also help benefitting states in debt reporting, domestic expenditure arrears management, and debt sustainability analyses.

    She, however, noted that the support would be given based on the performance of beneficiaries in fiscal transparency and debt management practices

  • Nigeria owed N25.7trn debt as at June 30 — DMO

    Nigeria owed N25.7trn debt as at June 30 — DMO

    The Debt Management Office (DMO), says as at June 30, Nigeria owes N25.7 trillion in debt both domestically and externally.

    The DMO said this in its ‘Total Public Debt Portfolio’ obtained from its website on Wednesday in Abuja.

    The News Agency of Nigeria (NAN) reports that as at Dec. 31, 2018, Nigeria’s total debt stock stood at N24.38 trillion.

    The present figure shows an increase in debt stock of N1.32 trillion.

    The DMO said that the current total debt stock comprised both the Federal Government debt, that of the 36 states and the Federal Capital Territory

    For the Federal Government, the DMO said it owed N20.42 trillion, while the states and FCT owed N5.27 trillion.

    Of the Federal Government debt, N7.01 trillion was categorised as external debt, while N13.412 trillion was categorised as domestic debt.

    For the states and the FCT, N1.309 trillion was owed externally, while N3.966 trillion was owed domestically, the DMO said.

    Giving details of the Federal Government’s domestic debt stock by instrument, the DMO said Bonds accounted for N9.691 trillion and Treasury Bills N2.651 trillion.

    Others are Treasury Bonds N125.9 billion, Savings Bond N10.431 billion, Sukuk N200 billion, Green Bond N25.69 billion and Promissory Notes N707.7 billion.

    Meanwhile for debt service in the second quarter of 2019, the DMO said that the nation had spent N76.951 billion.

  • Nigeria’s debt hits N25.7trn – DMO

    Nigeria’s debt hits N25.7trn – DMO

    Nigeria’s total public debt increased by to N25.7 trillion as at the end of June 2019 from N22.38 trillion as of June 2018, the Debt Management Office (DMO) said yesterday.

    This means that the country’s debt increased by N3.32 trillion in one year.

    The debt stock, the DMO said, is made up of N8.32 trillion ($27.16bn) external debt and N17.38 trillion borrowed domestically.

    According to latest data posted on the DMO website, the N25.7 trillion debt comprise N20.42 trillion owed by the Federal Government owed as of June 30, 2019, while the 36 states and the Federal Capital Territory had a total debt portfolio of N5.28 trillion.

    It would be recalled that the International Monetary Fund (IMF) in January this year warned Nigeria and other highly indebted countries against “a legacy of excessive debt”.

    Also during its meeting last month, the Central Bank of Nigeria’s Monetary Policy Committee (MPC) noted that the rising public debt was one of the factors hindering the nation’s growth prospects.

    However, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said in August this year that the country did not have a debt problem, but faced the challenge of generating sufficient revenue.

    She said: “There is a lot of insensitivity around the level of our debt. I want to restate that our debt is not too high — what we have is a revenue problem. Our debt is still very much within a reasonable fiscal limit. In fact, among our comparative countries, we are the least in terms of borrowing.”

  • Osinbajo inaugurates committee to recover N5tr AMCON debts

    Osinbajo inaugurates committee to recover N5tr AMCON debts

    Vice President Yemi Osinbajo on Tuesday inaugurated an inter-agency committee to recover the N5 trillion debts owed the Asset Management Corporation of Nigeria (AMCON).

    A statement by the Senior Special Assistant on Media and Publicity to the Vice President, Laolu Akande, disclosed this on Tuesday.

    The statement said that members of the committee include heads and representatives of agencies such as AMCON; the Economic and Financial Crimes Commission; Nigerian Financial Intelligence Unit; the ICPC; Central Bank of Nigeria; Nigeria Deposit Insurance Corporation; and the Federal Ministry of Justice.

    “One of the terms of reference is for the committee to prepare a report, giving us a sense of what the timelines will be” Osinbajo was quoted to have said.

    The statement added that “about 67 per cent of the outstanding N5 trillion debt is said to be owed by just 20 individuals/entities.”

  • NECO withholds Niger students’ results over N470m debt

    Students in public secondary schools in Niger State are currently unable to access their NECO May/June SSCE results as the examination body has withheld the results of the students due to debts owed by the government.

    The NECO May/June SSCE results were released on the 27th of August 2019.

    Students bemoaned their inability to access their results in order to attend Post-UTME screenings of the universities of their choice.

    The Niger State Government has admitted that they are owning the examination body N470 million adding that they have paid N150 million.

    The Permanent Secretary of the Niger State Ministry of Education, Abubakar Aliyu admitted that they are owning the examination body but appealed for consideration to enable the students to access their results especially those due for post UTME screenings.

    “The state government has been paying NECO and WAEC for its students from the previous government and the arrangement has always been that when the government has funds, we pay installmentally.

    “NECO is owned N400 million this year and the government has commenced the payment. Last week Friday, we remitted N150 million to them and we are still negotiating with them to release the result but they have not. Hopefully, they may release it today (Monday).”

    Aliyu declared that the government does not have enough money to give to NECO at once assuring that they will pay whenever there are available funds.

    “For us, as a government, we do not have money to release at once but as a responsive government, we have a clear picture of what we want to do. Once we get money, we will make release them. Within the availability of resources, we have given what we have and we will continue to give them what we have until we clear the accumulated debts.”

    The Permanent Secretary, however, stated that if the result is not released before the end of Monday, they will look for ways of sourcing for money to pay the debts adding that one of the Directors in the Ministry is still in a meeting with NECO as at the time of interviewing him.

    The Information Officer, Mallam Azeez Sani could not be reached to state the stand of NECO as to why the examination body has not released the results of the students in the state.

  • N537m debt: Court clears Duke after N350m payment

    A Federal High Court in Lagos on Wednesday cleared a former Cross River State governor Mr Donald Duke of his N537,334,360.77 debt to Asset Management Corporation of Nigeria (AMCON) after he paid N350 million as final settlement.

    The court discharged its August 21 interim order which had permitted AMCON and the United Bank for Africa (UBA) to seize Duke’s properties and funds in his accounts.

    Justice Nicholas Oweibo cleared Duke following settlement terms filed and moved by AMCON’s legal team from Benson Reeds Legal Practitioners, Abuja.

    AMCON counsel, Mrs Juliet Benson, told the judge that Duke had fulfilled the terms of the out-of-court settlement and both parties had agreed to the terms.

    “I hereby pray the court to adopt the terms of settlement as the judgment of court,” Benson said.

    Duke’s counsel, Mr Edoigiawerie Omoruyi confirmed that his client had “shown good faith by promptly making the payment of over N350m which parties all agreed to.

    “I join my colleagues in praying the court to enter our terms of settlement as the full and final judgment of court.”

    In a bench ruling, Justice Oweibo upheld their prayers.

    The judge added: “All orders in the case stands discharged.”

    AMCON had on August 8 sealed off Duke’s Ikoyi home following the interim order.

    Justice Oweibo, on September 3, upheld Duke’s prayer and adjourned till September yesterday, for a report of settlement, after Duke promised to pay off the debt.

    Stonehedge Investment Ltd, Duke and his wife, Owanari Bob-Manuel Duke, were first to third defendants in the suit.

  • Give me 12 hours to clear my N537m debt, Donald Duke begs court

    A former Cross River State Governor Donald Duke on Monday told a Federal High Court in Lagos that he would pay his N537, 334,360.77 debts to Asset Management Corporation of Nigeria (AMCON) in less than 12 hours.

    Duke, through his counsel, Mr Edoigiawerie Omoruyi, told Justice Nicholas Oweibo that he had approached AMCON with a promise to liquidate the debt before the end of yesterday, September 2.

    He prayed for an adjournment to enable him settle the case out of court.

    AMCON, on August 8 through its counsel Juliet Reeds obtained the court’s order to take interim possession of Duke’s Ikoyi home.

    The court also authorised AMCON and United Bank for Africa (UBA) to, in the interim, take possession of funds in the accounts of Duke and others in any bank.

    The judge made the order pursuant to AMCON and UBA’s August 8, 2019 ex parte application, marked, FHC/L/CS/1373/2019.

    The applicants listed Stonehedge Investment Ltd, Duke and his wife, Owanari Bob-Manuel Duke, as first to third defendants in the suit.

    When proceedings resumed yesterday at about 2pm, Omoruyi said Duke was willing to liquidate the debt before yesterday’s midnight deadline for repayment of the loan.

    AMCON’s counsel Mr Austin Erhabor of Benson Reeds Legal Practitioners, confirmed that Duke approached the corporation with a pledge to pay the debt before the expiration of midnight.

    Erhabor added: “In the spirit of trust and fairness, we will concede to an adjournment to enable us finalise the possible settlement.”

    Justice Oweibo upheld Duke’s prayer and adjourned till September 11, for a report of settlement.

    AMCON and UBA, on August 8` prayed the court for “an order of interim attachment, possession and custody of the property being No. 3, Temple Road, Ikoyi, Lagos.”

    They averred that the property was mortgaged by Duke “as collateral in securing the 1st respondent’s indebtedness to the applicants.”

    They urged the court to grant them possession of the property “pending the institution and disposal of proceedings for recovery of debt against the respondent, pursuant to Section 49 of the AMCON Act 2010 (as amended).”

    They also prayed the court for an interim Mareva injunction to take possession of funds in the accounts of Duke and others in any bank “pending the institutional and disposal of proceedings for the recovery of a debt of N537,334,360.77 made up of the principal debt and interest against the respondents pursuant to Section 50 of AMCON Act 2010.”

    The judge granted the prayers, in addition to an order restraining the respondents from “transacting, transferring, changing or howsoever dealing in any manner or interfering with the applicants’ possession” of the Ikoyi property.