There have been concerns about Nigeria’s debt profile, both internal and external. Data from Nigeria’s Debt Management Office (DMO) and the Nigerian Bureau of Statistics (NBS) show that Nigeria has raked up loans in the past seven years more than the other democratic administrations since 1999. By the time President Muhammadu Buhari hands over to the next president on May 29, 2023, his administration will be leaving a huge amount of debt pegged at about N49.93 trillion. This figure covers both external and domestic debt. The amount is also nearly 300 percent higher than the total debt that President Buhari met in 2015.
In the last two months, the government has borrowed about N3.73 trillion. Data indicates that the Federal Government raised N1.599 trillion in the fourth quarter of 2022. According to the DMO, FG raised a total of N2.129 trillion from January to March 2023. When the debt is analyzed, the result indicates that Nigeria’s domestic debts have surged to N30.643 trillion. The reason is mainly due to new borrowings of about N1.599 trillion in fourth quarter of 2022 and N2.29 trillion in the first two months of 2023. So, Nigeria has borrowed more money in 2022 than any year in the last seven years.
Loans raised from domestic market following international downgrades.
The country’s external debt went up to N18.282 trillion because of the fall of the naira. The national debt for the third quarter ending September 30, 2022, which was released by the DMO, reveals that Nigeria had a total debt of N44.064 trillion, including domestic debts of about N26.916 trillion and external debts of N17.148 trillion. The Central Bank of Nigeria (CBN), while stating that the official exchange rate is N460.96 per dollar, revealed that the country has acquired N1.13 trillion to the nation’s converted foreign debts due to naira depreciation. External debt increased from N17.148 trillion in the third quarter of 2022 to N18.282 trillion.
FG has continued to raise funds through the monthly issuance of common bonds, retail savings bonds and treasury bills. It has become more dependent on the domestic capital market as it is faced with downgrades by international rating agencies, which has negatively impacted its ability to raise funds on the global markets. It has raised about N8.8 trillion in regular debt via the domestic market since the beginning of 2023. According to the analysis of the data, about N852.926 billion was raised via the nation’s treasury Bills, N4.174 billion via the FGN Savings Bonds, and N741.55 billion via regular bonds and Sukuk releases in fourth quarter of 2022.
Nigeria is the 5th most indebted African country to China.
In January 2023, the Federal Government raised N662.617 billion in Treasury Bills and N633.03 via FGN Savings Bonds, which it introduced in 2017. In February 2023, it raised N1.189 trillion, including N770.56 billion via bond auctions, N4117 billion by Treasury Bills, and N1.271 billion by FGN Savings Bonds. Total borrowings in February 2023 represent 26.4 percent more than N940.62 billion raised in January 2023. The total debt issued in the last two months represents more “than a” 33 percent increase on the total debt issued in the last quarter of 2022.
Furthermore, recent data has shown that Nigeria, Africa’s largest economy, is one of the most indebted African countries to China. It owes $4.15 billion to the Asian country. Debts owed to China across the continent are a hotly debated topic, raising global concerns as big economies accuse the Asian giant of setting a debt trap for impoverished African countries. According to a Business Insider report, China’s loan accounts for 12 percent of Africa’s private and public external borrowings, which have surged five times to $696 billion from 2000 to 2020.
The World Bank has identified seven African countries as being in debt distress.
China remains a significant creditor to many African countries. However, its lending has declined recently. The situation may worsen in 2023, stifling the ability of African countries to raise needed funds to deliver on social and infrastructural developments. The World Bank has identified seven African countries as being in debt distress in 2022 due to the enormity of China’s loans. Five of these countries are among the ten most indebted African countries to China. Debt distress is a situation where a country is unable to fulfill its financial obligations and debt restructuring is required. This is usually caused by unsustainable debt.
Debt Management Office Nigeria: Website