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Nigeria’s Debt Vulnerable, Costly, World Bank Alerts

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The World Bank has disclosed that Nigeria’s debt, which may be considered sustainable for now, is vulnerable and costly.
According to the Washington-based global financial institution, the country’s debt is also at risk of becoming unsustainable in the event of macro-fiscal shocks.
The bank said this in the November edition of its Nigeria Development Update.
It said, “Nigeria’s debt remains sustainable, albeit vulnerable and costly, especially due to large and growing financing from the Central Bank of Nigeria (CBN).
“While currently the debt stock of 27per cent of the Gross Domestic Product (GDP) is considered sustainable, any macro-fiscal shock can push debt to unsustainable levels.
“However, the debt to the GDP in Nigeria is rising quickly, and the total stock of debt in absolute value has almost doubled between 2016 and 2020, and without a policy change is expected to reach 40per cent of the GDP by 2025.”
The bank further expressed concerns over the nation’s cost of debt servicing, which according to it, disrupts public investments and critical service delivery spending.
“The cost of debt servicing is also a concern as it is potentially crowding out public investment and critical service delivery spending. Interest costs have been above two per cent of the GDP since 2018, reaching 2.4per cent of the GDP in 2019 and then falling to 2.2per cent of the GDP in 2020.
“Cost of debt is high as Federal Government also resorts to overdraft (Ways and Means financing) from the CBN to meet in-year cash shortfalls. At end of 2020, the stock of the CBN Ways and Means financing was estimated at N13.1trillion or 8.5per cent of the GDP,” it stated.
It, however, said that the Federal Government was making efforts to negotiate terms with the CBN in order to convert the stock of overdraft financing into a long-term debt instrument, which would lower the cost of debt for the government and enhance fiscal sustainability over the medium long term.
Economists have raised concerns over the rising debt profile of the Federal Government.
It would be recalled that the Federal Government has been planning to push its public debt stock to N50.22trillion by 2023, with domestic debt at N28.75trilion and external debt at N21.47trillion.
This was according to the projections in the National Development Plan 2021-2025.
The Debt Management Office had disclosed that Nigeria’s public debt was N38trillion as of the end of the third quarter of 2021, with the total debt stock rising by N2.540trillion in three months between July and September, 2021.
The NDP shows that the President Muhammadu Buhari-led Federal Government plans to accumulate about N12trillion debt in two years from 2021 to 2023.
However, based on the plan, the government targets a reduction in total public debt by 2025.
A tabular illustration in the document shows the government targets N39.59trillion debt stock for 2021, N46.63trillion for 2022, N50.22trillion for 2023, N50.53trillion for 2024, and N45.96trillion by 2025.
Analysts have agreed with the World Bank on the costly and vulnerable nature of Nigeria’s public debt.
The Fiscal Policy Partner and Africa Tax Leader of PwC, Mr Taiwo Oyedele, expressed his agreement with the World Bank’s assertion, highlighting the high cost of debt servicing.
He said, “I agree with the World Bank. Although the debt to GDP ratio is not too high, if you think about the debt service cost to revenue ratio, it is already over 70per cent. That’s when you know it’s costly.
“Nigeria borrows at double-digit, and even when we borrow in dollars, the rates are very high and then you devalue the naira and the cost of servicing the debt in naira goes up because it is dollar-dominated debt.
“Put all of that together, and you can easily say to yourself that even though our debt to GDP ratio is very low, our cost of borrowing is unsustainable because it is very high, and therefore, make it very costly.”
He advised the government to have an integrated debt-revenue-expenditure strategy, which would address expenditure efficiency, terms of borrowing, and revenue optimisation.
He also advised the government to reconsider its priorities regarding its national budget.
A former deputy governor of the Central Bank of Nigeria and former presidential candidate, Kingsley Moghalu, also criticised the increasing borrowing tendency of the government, urging the officials to re-consider other ways of generating revenue for the country.
“There are many ways through which we can improve Nigeria’s domestic revenue situation without selling the future of our country. As to the argument that Nigeria does not have a debt problem but a revenue problem, that is mere sophistry. If you’re spending 90kobo of every one naira you earn repaying debt, you are insolvent.
“You cannot say that we have a debt-to-GDP ratio that allows you to continue borrowing. No! That is an argument for sustainable economies. You cannot be comparing Nigeria with advanced economies. We are in an economy that is still very basic.
“If you are not earning enough revenue, why are you borrowing? You are just compounding your problem. Why don’t you focus on where to get the revenue from instead of lazily ignoring that problem and just trying to survive with borrowing?
“If an individual was living a life that way, it would be a calamity. That is why Nigeria is in a calamitous situation today economically,” he said.
According to Moghalu, it is also not reasonable to borrow for infrastructural development as the government can expand the public-private partnership options for such development.
He said, “You cannot be borrowing for infrastructure. They should go and expand the PPP options for infrastructure.
“You don’t have to impoverish this country by borrowing. This is not sensible economic management.
“How sustainable economically are those infrastructures they claim to be building? Are they yielding enough money to pay back the debt?”

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Monarch Fingers Political Class On Community’s Socio-Economic Woes

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Paramount Ruler of Owei-wari Community of Biseni Clan in the Yenagoa Local Government Area of Bayelsa State, HRH Elijah Opia Churchman, has alleged that some members of the political class in the clan were against the socio-economic prosperity and development of his community.
The royal father stated this recently at the State Secretariat complex, Yenagoa, the state capital, during an interview with Journalists shortly after his exit from the Federal High Court, Yenagoa, where he said he was currently pursuing a case the community instituted against some alleged anti-development agents.
He said while the Owei-wari Community used to be a compound in one of the communities of the kingdom, some years ago as landlords and host of an oil firm operating in the area, the compound having been overwhelmed by the constant outcry of marginalization by its people, moved for recognition as an autonomous community in the clan.
The monarch, who also bared his mind on the intentions of a group called “the Progressive Minded forum of Biseni clan”, said the group has been a strong advocate of the creation of more clans for the people of Biseni in which his community would also be a clan.
He reaffirmed his commitment to the continued pursuit of peace, progress and development of his community and the entire clan, noting, however, that for years now some members of the political class in the area have conspicuously been working against the realization of the dreams and yearnings of the Owei-wari Community.
“We’re working assiduously to see that at least six clans are created in the current Biseni clan so that Owei-wari Community with over 13 settlements becomes one of them, but some politicians and a few of their followers in the clan are working against us for no obvious reasons.
“We’ve advised the King of Biseni Clan that his scope of domain should extend to all Biseni communities and lands from the Orashi River, River Nun, through River Niger so that he can oversee the entire six clans that we plan to create in the kingdom.
“In our thinking as it were, now that we’ve Okordia/Biseni/Zarama in Yenagoa Local Government Area for the state House of Assembly constituency, when more clans are created in Biseni in which communities like Egbebiri, Tein, Toboru, Akpede and Owei-wari would become clans, then as a kingdom, whenever it’s our turn to produce the Assembly member we can then rotate it amongst the clans in Biseni Kingdom and not as it were presently”, the royal father said.
He continued that, “We think that it’s going to be of political, social and economic advantage to us as a clan, but some members of the political class were bent on undoing Owei-wari Community and the clan in general.
“As a community, recently we’ve written to the Nigerian Agip Oil Company (NAOC) to develop all the satellite villages and fishing camps to modern cities in Owei-wari and make them economically viable.
“So, by our expectations, some are to have the status of academic cities, industrial cities, etc.”

By: Ariwera Ibibo-Howells, Yenagoa

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You Failed Nigerians, Falana Slams Power Minister

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Human rights lawyer, Femi Falana, SAN, has passed a vote of ‘no confidence’ in the Federal Government, saying that the Minister of Power, Adebayo Adelabu, has failed Nigerians.

Falana was reacting to Adelabu’s appearance before the Senate to defend the increase in the electricity tariff and what Nigerians would pay on Monday.

The rights activists also claimed that the move is a policy imposed on the Nigerian government by the International Monetary Funds (IMF) and the World Bank.

Speaking on the Channels TV show on Monday night, Falana said, “The Minister of Power, Mr Adebayo Adelabu has failed to address the question of the illegality of the tariffs.

“Section 116 of the Electricity Act 2023 provides that before an increase can approved and announced, there has to be a public hearing conducted based on the request of the DISCOS to have an increase in the electricity tariffs. That was not done.

“Secondly, neither the minister nor the Nigeria Electricity Regulatory Commission has explained why the impunity that characterised the increase can be allowed.”

Falana also expressed worry over what he described as impunity on the part of the Federal Government and electricity regulatory commission.

““I have already given a notice to the commission because these guys are running Nigeria based on impunity and we can not continue like this. Whence a country claims to operate under the rule of law, all actions of the government, and all actions of individuals must comply with the provisions of relevant laws.

“Secondly, the increase was anchored on the directives of the commission that customers in Band A will have an uninterrupted electricity supply for at least 20 hours a day. That directive has been violated daily. So, on what basis can you justify the increase in the electricity tariffs”, Falana queried.

The human rights lawyer alleged that the Nigerian government is heeding an instruction given to her by the Bretton Wood institutions.

He alleged, “The Honourable Minister of Power is acting the script of the IMF and the World Bank.

“Those two agencies insisted and they continue to insist that the government of Nigeria must remove all subsidies. Fuel subsidy, electricity subsidy and what have you; all social services must be commercialised and priced beyond the reach of the majority of Nigerians.

“So, the government cannot afford to protect the interest of Nigerians where you are implementing the neoliberal policies of the Bretton Wood institutions.”

The Senior Advocate of Nigeria accused Western countries led by the United States of America of double standards.

According to him, they subsidize agriculture, energy, and fuel and offer grants and loans to indigent students while they advise the Nigerian government against doing the same for its citizens.

Following the outrage that greeted the announcement of the tariff increase, Adelabu explained that the action would not affect everyone using electricity as only Band A customers who get about 20 hours of electricity are affected by the hike.

Falana, however, insisted that neither the minister nor the National Electricity Regulatory Commission (NERC) has justified the tariff increase.

The senior lawyer said that Nigerian law gives no room for discrimination against customers by grading them in different bands.

He insisted that the government cannot ask Nigerians to pay differently for the same product even when what has been consistently served to them is darkness.

Following the outrage over the hike, Adelabu on Monday appeared at a one-day investigative hearing on the need to halt the increase in electricity tariff by eleven successor electricity distribution companies amid the biting economic situation in Nigeria.

However, Falana said that nothing will come out of the probe by the Senate.

He advised that the matter has to be taken to court so that the minister and the Attorney General of the Federation can defend the move.

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1.4m UTME Candidates Scored Below 200  -JAMB 

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The Joint Admissions and Matriculation Board (JAMB) on Monday, released the results of the 2024 Unified Tertiary Matriculation Examination, showing that 1,402,490 candidates out of  1,842,464 failed to score 200 out of 400 marks.

The number of candidates who failed to score half of the possible marks represents 78 per cent of the candidates whose results were released by JAMB.

Giving a breakdown of the results of the 1,842,464 candidates released, the board’s Registrar, Prof. Ishaq Oloyede, noted that, “8,401 candidates scored 300 and above; 77,070 scored 250 and above; 439,974 scored 200 and above while 1,402,490 scored below 200.”

On naming the top scorers for the 2024 UTME, Oloyede said, “It is common knowledge that the Board has, at various times restated its unwillingness to publish the names of its best-performing candidates, as it considers its UTME as only a ranking examination on account of the other parameters that would constitute what would later be considered the minimum admissible score for candidates seeking admission to tertiary institutions.

“Similarly, because of the different variables adopted by respective institutions, it might be downright impossible to arrive at a single or all-encompassing set of parameters for generating a list of candidates with the highest admissible score as gaining admission remains the ultimate goal. Hence, it might be unrealistic or presumptive to say a particular candidate is the highest scorer given the fact that such a candidate may, in the final analysis, not even be admitted.

“However, owing to public demand and to avoid a repeat of the Mmesoma saga as well as provide a guide for those, who may want to award prizes to this set of high-performing candidates, the Board appeals to all concerned to always verify claims by candidates before offering such awards.”

Oloyede also noted that the results of 64,624 out of the 1,904,189, who sat the examination, were withheld by the board and would be subject to investigation.

He noted that though a total of 1,989,668 registered, a total of 80,810 candidates were absent.

“For the 2024 UTME, 1,989,668 candidates registered including those who registered at foreign centres. The Direct Entry registration is still ongoing.

“Out of a total of 1,989,668 registered candidates, 80,810 were absent. A total of 1,904,189 sat the UTME within the six days of the examination.

“The Board is today releasing the results of 1,842,464 candidates. 64,624 results are under investigation for verification, procedural investigation of candidates, Centre-based investigation and alleged examination misconduct”, he said.

Oloyede also said the Board, at the moment, conducts examination in nine foreign centres namely: Abidjan, Ivory Coast; Addis Ababa, Ethiopia; Buea, Cameroon; Cotonou, Republic of Benin; London, United Kingdom; Jeddah, Saudi Arabia; and Johannesburg, South Africa.

“The essence of this foreign component of the examination is to market our institutions to the outside world as well as ensuring that our universities reflect the universality of academic traditions, among others. The Board is, currently, fine-tuning arrangements for the conduct of the 2024 UTME in these foreign centres,” he explained.

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