Business

Debt Servicing To Hit N10.43tn, Economists Slam FG

Published

3 years ago

August 8, 2022

The Federal Government has projected that debt servicing will cost N10.43tn by 2025, according to the 2023-2035 Medium Term Expenditure Framework & Fiscal Strategy Paper.

This is a 182.66 per cent increase from the N3.69tn budgeted for debt service in 2022.

Multilateral agencies and economists have constantly warned the Federal Government about the rising cost of debt service, which can trigger a crisis for the country.

However, the Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, and the Director General of the Debt Management Office, Patience Oniha, have insisted that the country does not have a debt problem but a revenue challenge.

In a document by the DMO DG recently obtained by our correspondent, the DMO stated that high debt levels would often lead to high debt services and affect investments in infrastructure.

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 the capacity to finance policy objectives without resort to unduly large adjustments or exceptional financing such as arrears accumulation, debt restructuring, which could otherwise compromise the economy’s stability.

Speaking at the launch of the World Bank’s Nigeria Development Update titled, ‘The urgency for business unusual,’ held recently in Abuja, the finance minister had admitted that Nigeria was struggling to service its debt.

She said, “Already, we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate, so it is a very difficult situation.”

The International Monetary Fund 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.”

Less than two months after Aisen’s warning, the finance minister 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, as against a retained revenue of N1.63tn.

According to a recent PUNCH report, the Federal Government exceeded its debt service allocation by N1.15tn for the period between January and November 2021.

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.

The PUNCH also reports that Nigeria’s debt servicing bill increased by 109 per cent, from N429bn in December 2021 to N896bn in March 2022.

A report by the Nigerian Economic Summit Group and the Open Society Initiative for West Africa has disclosed that Nigeria and 10 other Economic Community of West African States countries are currently in debt distress based on debt sustainability analysis.

The 10 other countries are: Benin, Burkina Faso, Cabo Verde, the Gambia, Ghana, Guinea Bissau, Liberia, Niger, Senegal, and Togo.

It was further disclosed in the report that public debt accumulation for these countries was becoming unsustainable and needed to be addressed to avert the looming debt crisis.

The report warned that the possibility of a debt crisis in Nigeria would adversely affect public and private investments, as well as other sectors of the country.

The World Bank recently said that Nigeria’s debt, which might be considered sustainable for now, was vulnerable and costly.

According to the Washington-based global financial institution, the country’s debt was also at risk of becoming unsustainable in the event of macro-fiscal shocks.

Experts have kicked against the Federal Government’s proclivity for debt, which they have described as unsustainable.

Economists slam FG’s debt proclivity

The Chief Executive Officer of Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said that the Nigerian economy had been characterised by diverse economic vulnerabilities, which included rising public debt and debt service burden.

He said, “Debt service to revenue ratio for the first four months of the current year is over 100 per cent. The implication of this is that the actual revenue of the government over the period is not sufficient to service debt. Therefore, financing of the operations of government – personnel cost, overhead cost, capital expenditure, and even part of the servicing of the debt – will have to come from additional borrowing. These portend severe vulnerabilities for the Nigerian economy.”

A Professor of Development Macroeconomics at the University of Lagos, Prof Olufemi Saibu, criticised the government for over-borrowing.

He said, “I think we are over-borrowing. We continue to rely on international benchmarks, which make us lazy in terms of revenue generation.”

Prof Saibu urged the government to lessen its huge expenditure costs and channel money into more productive sectors of the economy.

“With our current heavy infrastructure debt financing and the low productivity in the local economy, the government needs to find a way of reducing its expenditures. We need to redirect the government’s finances to areas that are productive and borrow less for consumption,” he said.

In addition, Prof Saibu said that the government needed to look inwardly and borrow domestically rather than externally, which would lessen the burden of debt service.

He said the government should stop saying the country had the capacity to borrow more, and refrain from ballooning already outsized debts.

Prof Saibu advised that the government should engage the private sector in the area of infrastructure development to reduce the weight on the public sector.

A Professor of Development Economics at Babcock University, Prof Adegbemi Onakoya, said that borrowing was not an issue but the value obtained from it.

He also said that Nigeria had a revenue problem, which had made the country rely more on debt financing.

Prof Onakoya also said that there was a problem when money borrowed was not judiciously applied for productive purposes or programmes that would help production.

PUNCH

Business

Fuel Scarcity Imminent As NUPENG, Dangote Face-off Festers Business

Published

2 hours ago

September 5, 2025

Editor

The stability in the distribution and availability of petroleum products being enjoyed by Nigerians is about to be aborted as a result of the seeming cold war between the management of the Dangote Refinery and one of the umbrella unions of workers in the oil industry, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG).

NUPENG, in a statement jointly signed by Comrades Williams Akporeha and Afolabi Olawale, President and General Secretary, respectively of NUPENG and issued to newsmen in Abuja on Friday, the Union accused the management of Dangote Refinery of alleged anti-labour practices, inimical to the survival and means of livelihoods of its members under its Petroleum and Tanker Drivers Branch.

The Union specifically expressed strong reservations about the position of Chairman of Dangote Refinery, Aliko Dangote, that drivers recruited for operations of its 10,000 Compressed Natural Gas (CNG) Trucks imported into the country would not be allowed to join any trade union.

The Union described the position taken by the management of Dangote Refinery as an affront on the right of association, guaranteed under the 1999 Constitution, and a breach of relevant international labour laws to which Nigeria is a signatory.

The NUPENG recalled several meetings it initiated, jointly with the leadership of the Nigerian Association of Road Transport Owners ( NARTO), to prevail on Aliko Dangote to rescind his stance not to allow its drivers to join trade unions. The Union expressed regret that its appeals fell on deaf ears.

“Arising from the unfortunate outcome of the meeting, the leadership of the Union has made several efforts to get relevant institutions of the country to make Alhaji Aliko Dangote and his cousin, Alhaji Sayyu Ali Dantata, follow the line of global best practices and decency, but all to no avail.

“To our utmost shock, Alhaji Sayyu Aliu Dantata’s MRS commenced the recruitment of drivers for the imported CNG Trucks on Friday, 29th August 2025. “The drivers being recruited are being forced to sign an undertaking not to belong to any existing union in the Oil and Gas Industry.

“NUPENG is seriously concerned and disturbed with the unconscionable business practices of Alhaji Sayyu Aliu Dantata and Alhaji Aliko Dangote, who are scared of allowing unions to exist in their business outfits. To us, amassing wealth on the basis of enslavement, depriving workers of a union and a voice, amounts to creating filthy wealth.

“NUPENG will not stand idly by while these billionaires seek to destroy the livelihoods of thousands of workers, including tanker drivers.

“NUPENG stood in solidarity with Dangote Refinery during its construction and commissioning.

“We did so in good faith, in expectation that it would create jobs, strengthen local capacity, and benefit the Nigerian people, under a conducive atmosphere for unions to thrive.

“Unfortunately, Alhaji Aliko Dangote has chosen to betray that trust by scheming to monopolise distribution, crush competition, and enslave the sector and raise prices, which would ultimately result in an attack on the living standards of the masses of ordinary Nigerians.

“This is not philanthropy, it is economic sabotage!”
While appealing to relevant oil industry regulatory agencies to wade into the unfolding crisis, the Union dropped the hint that it would call on its members to down tools and shun loading of petroleum products, effective from Monday, September 8.

“We call on the Nigerian Midstream & Downstream Petroleum Authority (the Authority, for
short) to invoke its powers under Section 32(u) & (aa) of the Petroleum Industry Act (PIA). Under those two provisions, the Authority is empowered to promote competition and private sector participation in the midstream and downstream petroleum operations.

“The Authority has responsibility to identify, investigate, and prevent abuse of dominant positions and
restrictive business practices with regard to midstream and downstream petroleum operations.

“Nigeria is a member of the international community and a member state of the International Labour Organisation. Nigeria has ratified Convention No. 87 of 1948, the Convention on Freedom of Association and Protection of the Right to Organise, 1948. This Convention had
been ratified by Nigeria as far back as 17th October 1960. Under the Convention, workers have the right to join unions of their choice, for the protection of their employment and trade union rights, and without prior authorization of any employer or authority.

“Indeed, by virtue of section 254C (2) of the Constitution of Nigeria, a ratified ILO Convention is a constitutional provision.

“Therefore, any practice or policy by any employer that seeks to deprive workers of the right of association is an affront to the Constitution.

“Above all, the rights of association, including membership of trade unions, are guaranteed by Section 40 of the Constitution. Alhaji Aliko Dangote and his cousin, Alhaji Sayyu Aliu Dantata, should not be allowed to enslave Nigerian workers. They should be made to be lawful business persons and not lawless individuals or business outfits. Nigeria is a country of laws, not a lawless society.

“By this statement, we call on the Federal Government of Nigeria and its agencies, including well-meaning segments of the Nigerian society, to call the two trillionaire businessmen to order. They should be told to obey the laws of Nigeria. If they persist in their anti-union, tyrannical attitudes, NUPENG is set and ready to mobilise its forces to fight within the framework of the law.

“Meanwhile, since Alh Aliko Dangote and his cousin have resolved to replace all Petroleum Tanker Drivers in Nigeria, and no one or institution can stop them, the members of the Petroleum Tanker Drivers Branch of NUPENG will, from Monday, 8th September 2025, start
looking for alternative employment/skills and sources of livelihoods.

“We plead with the general public to bear any inconveniences our struggle against this tyranny and indecency may cause.“
(TRIBUNE)

Business

FG Offers Up To 16.54% Yield On September Savings Bonds

Published

4 days ago

September 1, 2025

Editor

The Federal Government, through the Debt Management Office, is offering investors annual yields of up to 16.541% on its September 2025 Federal Government of Nigeria Savings Bonds.

The DMO, in a circular on its website on Monday, announced that the subscription window opens immediately and will close on Friday, September 5, 2025, with settlement scheduled for September 10, 2025.

Coupon payments will be made quarterly on March 10, June 10, September 10, and December 10 and will be paid directly to investors.

The DMO offered investors two subscription categories of the Federal Government Savings Bond.

The first is a two-year bond, which will mature on September 10, 2027, and attracts an annual interest rate of 15.541 per cent.

The second is a three-year bond, set to mature on September 10, 2028, with a higher annual interest rate of 16.541 per cent.

The two-year bond interest rate rose to 15.541% in September 2025, up from 14.401% in August.

Similarly, the three-year bond recorded an increase to 16.541% in September, compared to 15.401% in the previous month.

The FGN Savings Bond programme, launched in 2017, aims to deepen the domestic bond market, promote financial inclusion, and give retail investors access to secure, low-risk government securities.

Each bond unit is priced at ₦1,000, with a minimum subscription of ₦5,000 and additional subscriptions in multiples of ₦1,000. Individual investors can subscribe up to ₦50 million.

On the status of FGN Savings Bonds, DMO noted it “qualifies as securities in which trustees can invest under the Trustee Investment Act; Qualifies as Government securities within the meaning of Company Income Tax Act (“CITA”) and Personal Income Tax Act (“PITA”) for Tax Exemption for Pension Funds, amongst other investors.

“Listed on The Nigerian Exchange Limited (and); qualifies as a liquid asset for liquidity ratio calculation for banks.”

The office said the bond is “backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria.”

Business

NNPCL Reduces Fuel Price After Dangote Refinery’s Adjustment

Published

3 weeks ago

August 14, 2025

Editor

The Nigerian National Petroleum Company Limited has reduced its premium motor spirit pump price on Thursday, according to DAILY POST.

It was confirmed that NNPCL retail outlets in the Federal Capital Territory, Abuja, have reduced their pump price to N890 per litre from N945.

This new fuel price has been reflected in NNPCL retail outlets such as mega station Danziyal Plaza, Central Area, Wuse Zone 4, Wuse Zone 6, and other of its filling stations in the nation’s capital.

The latest downward review of fuel price in NNPCL outlets represents an N55 reduction in fuel pump price.

“It was reduced to N890 per litre this afternoon, down from N945,” an NNPCL fuel attendant told DAILY POST anonymously on Thursday.

This comes a Nigerian filling station, MRS Empire Energy, on Thursday adjusted their fuel pump price to N885 and N946 per litre, down from N910 and N955 per litre.

The latest fuel price reduction trend is unconnected to Dangote Refinery’s ex-depot petrol price adjustment by N30 to N820 per litre from N850 and the price of crude oil in the international market.