Business

FG service domestic debt with N5.24tn in 30 months

Published

2 years ago

September 21, 2022

Nigeria’s domestic debt service rose to N5.24 trillion in 30 months, data on the Debt Management Office (DMO) website has revealed.

The domestic debt was put at N20.95 trillion as of June 2022.

The latest report by the DMO revealed that domestic debt service in the first quarter of 2022 was at N664.73 billion, representing 0.6 per cent decline from N668.69 billion in the second quarter of 2022.

This implies that the Federal Government has serviced domestic debt with N1.33 trillion in the first half of 2022, a 43 per cent Year-on-Year (YoY) increase from N935.46 billion reported in first half of 2021.

Further breakdown revealed that the government domestic debt service was at N2.05 trillion in 2021, a 10.8 per cent increase from N1.85 trillion in 2020.

Following massive budget deficit, the FG of recent has borrowed aggressively through treasury bills, bonds, savings bonds and Sukuk to support infrastructure development across the country.

Experts have raised concerns as the government continues to obtain new loans from both local and external sources, despite growing debt profile and servicing cost.

The International Monetary Fund (IMF) has predicted that Nigeria’s debt service-to-revenue ratio would jump to 92 per cent in 2022 from 76 per cent in 2021.

Speaking with THISDAY, the CEO, Wyoming Capital & Partners, Mr Tajudeen Olayinka stated that the debt servicing by the federal government over the years has encouraged investors to provide additional support to the government with respect to further investment in government securities.

According to him, “It presents government in good light, with the opportunity to fund developmental projects across the country.

“The negative aspect of debt servicing in Nigeria is the sustainability problem that has now greeted the current administration of President Muhammadu Buhari, whereby, more than 100per cent of revenue is now being expended on debt servicing, giving room for possible default and failure of government in no distant future, especially with respect to foreign debt component.

“The fact that government spends its entire revenue to service debts, despite introducing new taxes and raising rates in some others, is an indication that economic agents are not generating enough outputs, sufficient to put Nigeria’s economy in the positive territory. It is actually a sign of declining output. It is simply a failure of fiscal policy.”

He hinted that the only way to cut the debt service figure down is for government to shift away from its current public sector dominance, and allow private sector businesses to occupy the driver’s seat, so as to consistently put the economy in the positive territory.

“Government should begin to consider removing subsidies in phases, in a manner that will not add more to the hardship on the ground. It also presents an opportunity to allow the economy to run a normal course of adjustment,” he added.

The CEO, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf commenting on raising debt profile noted that, “When we take account of borrowings from the CBN and the stock of AMCON debt, the debt profile would be in excess of N60 trillion.

“Although government tends to argue that the conditions was not a debt problem, but a revenue challenge. But debt becomes a problem if the revenue base is not strong enough to service the debt sustainably. It invariably becomes a debt problem and possibly a debt crisis. Government actual revenue can hardly cover the debt service obligations.

“Which implies that the entire capital budget and the recurrent expenditure may have to be funded from borrowing. This is surely not sustainable. The finance minister reported recently that in the first four months of this year, debt service to revenue ratio was over 100per cent.”

According to him, “What is needed is the political will to cut expenditure and undertake reforms that could scale down the size of government, reduce governance cost and ease the fiscal burden on the government.

“It is imperative for the country to operate as a true federation which it claims to be. The unitary character of the country is making it difficult to unlock the economic potentials of the sub nationals. It is perpetuating the culture of dependence on the federal government.

It is necessary to scale down the size of government and cost of governance. Fiscal sustainability is driven by both cost and revenue. Therefore, managing the major drivers of cost and revenue is imperative.

“As far as possible, the government should push back in sectors or activity areas where the private sector has the capacity to deliver desired outcomes. We should see more privatization at all levels of government.

“This would allow for the infusion of more private capital into the infrastructure space. We need to address the fuel subsidy conundrum at some point as it clearly not sustainable.”

– Thisday

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Appeal court takes over NURTW case as NIC withdraws

Published

22 hours ago

May 1, 2024

Trends Admin

Appeal court takes over NURTW case as NIC withdraws

The National Industrial Court has withdrawn from a case involving Alhaji Najeem Usman Yasin, Board of Trustees chairman of the National Union of Road Transport Workers (NURTW), and Alhaji Tajudeen Ibikunle Baruwa’s ambition to return as president of the union over lack of jurisdiction.

The industrial court’s decision was made to avoid conflict with the Court of Appeal, where the matter is already being heard.

Before the NIC announced its decision to hands-off the case, the defendants’ counsel, Mr. O.I. Olorundare SAN, had informed the court that the matter is currently before the Court of Appeal, Abuja division, and that the industrial court could not continue to adjudicate on the same matter.

The counsel cited authorities to support his claim, adding that the National Industrial Court does not have concurrent jurisdiction with the Court of Appeal.

The presiding judge, O.O. Oyewunmi, struck out the case, stating that the Appeal Court had taken over the matter and that the Industrial Court must respect the hierarchy of courts.

Alhaji Yasin and six others took the case to the Appeal Court, challenging the decision of the industrial court recognising a delegates’ conference held on May 24, 2023, where Baruwa was proclaimed as President of the union for a second term in office.

With the latest NIC judgement, both parties will now proceed to defend their positions at the Court of Appeal and await the final judgement.

Business

Multichoice shuns court order, proceeds with increase of DSTV, Gotv packages

Published

1 day ago

May 1, 2024

Trends Admin

Multichoice shuns court order, proceeds with increase of DSTV, Gotv packages

Despite the intervention of the CCPT, Multichoice Limited has proceeded to increase packages price for DSTV and GOTV as announce on Wednesday last week.

Newstrends had earlier reported that the corporation announced that the new rates will go into effect on Wednesday, May 1, 2024, in a statement.

Meanwhile, on Monday, MultiChoice Nigeria Limited was ordered by the Competition and Consumer Protection Tribunal (CCPT) in Abuja to suspend the planned prices and tariffs hike on packages and services.

Multichoice shuns court order, proceeds with increase of DSTV, Gotv packages

Business

As controversy over Maersk-FG port investment rages, Onanuga says no $600m deal signed

Published

1 day ago

May 1, 2024

Trends Admin

As controversy over Maersk-FG port investment rages, Onanuga says no $600m deal signed

The Nigerian government and a shipping giant, Maersk, have not signed any investment agreement, Bayo Onanuga, special adviser on information and strategy to President Bola Tinubu, has said.
Onanuga was reacting to the controversy surrounding the reported sealing of a $600 million deal for the development of the nation’s seaports.
He said there was only talk “of possible investment in Nigeria” by Maersk.
Interestingly Onanuga had hinted about the deal in a tweet said to have been pulled down after the social media backlash.
After President Tinubu’s discussion with Maersk’s Chairman Robert Uggla on April 28, on the sidelines of the World Economic Forum Special Meeting in Riyadh, Saudi Arabia, the presidency had released a statement announcing that the shipping company had pledged to inject $600 million into the Nigerian seaport industry.
“Danish shipping company, A.P Moller-Maersk plans $600m investment in Nigeria. Danish shipping and logistics company A.P Moller-Maersk has disclosed a planned investment of $600 million in Nigeria to accommodate more container shipping services in Nigerian ports,” Onanuga wrote on X.
In a statement, Tinubu’s spokesperson, Ajuri Ngelale, also said “President Tinubu meets Chairman of Danish shipping giant Maersk, secures $600 million investment in Nigerian seaport infrastructure.” He quoted Uggla as saying, “We believe in Nigeria, and we will invest $600m in existing facilities and make the ports accommodating for bigger ships.”
In response to this. Maersk officials have denied any such agreement and stress no deals have been signed.
Onanuga in a new report by TheCable, an online news platform admitted no agreement on investment had been reached by the two parties.
“I think the statement issued by Maersk did not talk about a deal. There was no deal according to that statement that I read.
“However, there was talk of investment,” the special adviser said.
“No document or agreement was signed, so there was no deal. But there was talk of a possible investment in the country.
“So, go and read the statement again. They never said any deal was signed between the Nigerian government and the Dutch company. There was nothing like that.”
Onanuga however said the shipping company did not expressly deny that there was an investment talk.
He said people are “unnecessarily giddy over nothing.