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Red flag on domestic borrowings as Tinubu considers N30tr fresh loans
Many African governments are currently grappling with the challenge of refinancing their domestic debts at increasingly high costs, all while straining the funding capacity of their central banks to bridge significant gaps in their finances. This situation has left many nations in dire financial straits, according to a report from S&P.
This crisis is exacerbated by the global tightening of monetary policies, making it difficult or unaffordable for many developing countries to access the global debt market. The Federal Reserve, for instance, has raised interest rates to multi-decade highs of 5.25-5.5 percent, with market analysts predicting more rate hikes in the near future.
The S&P report coincides with the Federal Reserve’s rate-fixing arm’s second-to-last meeting, which concluded with no change in interest rates. The report analyzes the domestic financial predicaments of leading African economies, including Nigeria, Egypt, Ghana, among others. This report is particularly relevant as Nigeria’s newly inaugurated administration struggles to manage governance amid formidable fiscal challenges.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, previously assured Nigerians that the administration would avoid accumulating debt to fund its activities. However, less than three months after this assurance, it appears that they may have sought additional loans, as foreign financiers are growing increasingly skeptical about the country’s ability to meet its financial obligations.
In preparation for the 2024 budget presentation, the Federal Government may seek at least N8.7 trillion to partially cover the estimated N9 trillion deficit. The government hopes to generate N206 billion from privatization proceeds, a strategy that has historically yielded little success.
The Medium-term Expenditure Framework (MTEF) for 2024 to 2026, submitted to the National Assembly, forecasts a total federal government deficit of N30.7 trillion. With expectations of less than N700 billion from privatization of public assets, the government is looking to raise the majority of the needed funds from both domestic and foreign debt markets.
As a common trend among fiscally strained African countries, the domestic market is expected to contribute 71 percent, or 21.4 percent of the debt funding. S&P describes this as a major crisis affecting many African leaders.
While Nigeria is not among the hardest-hit countries, such as Egypt, Zambia, Mozambique, and Ghana, in terms of domestic debt refinancing crises, it faces a significant debt challenge, with its debt-to-revenue ratio exceeding 100 percent. The fiscal deficit for this year’s budget performance is already estimated at N11.6 trillion, or over 50 percent of the total budget, according to government documents.
The Central Bank of Nigeria, which has previously accommodated the Federal Government’s fiscal excesses with unrestricted overdrafts, now promises to adhere to the regulations in managing its affairs. This shift may pose a challenge to the government’s plans for continued fiscal spending.
Economists have raised concerns about the exhaustion of the domestic debt market’s capacity, which stands at about N30 trillion. Nigeria has faced delays in fulfilling forward contracts, potentially leading to financial blockages and credit downgrades, affecting its ability to source funds from the financial market.
The country’s reliance on Central Bank overdrafts and local funding sources has increased, negatively impacting the private sector’s access to capital for expansion and job creation. The situation has led to difficulties for domestic financiers.
Real interest rates on domestic debt remain negative in several African countries, including Egypt, Ethiopia, and Nigeria. Egypt, in particular, has experienced a decrease in foreign investor interest since the onset of the COVID pandemic. The report also highlights risks associated with Egypt’s debt structure.
Zambia recently reached an agreement with bilateral creditors for debt relief under the G-20 Common Framework. However, Zambia’s weak fiscal measures pose significant risks to its domestic debt capacity.
Mozambique’s government has made late payments on domestic commercial debt, constituting a selective default on its local currency rating. The report notes that Mozambique has one of the highest domestic roll-over ratios in Africa.
In summary, many African governments are struggling to refinance their domestic debts amid rising global interest rates and limited access to the global debt market. This situation has serious implications for their fiscal stability and access to financial resources.
The presidential candidate of the Peoples Democratic Party (PDP) in the 2023 election, Atiku Abubakar, has suggested he might support Peter Obi, his Labour Party counterpart from the last election, in 2027.
The former Vice President, currently in merger talks with stakeholders from various opposition political parties, indicated he would back Obi if the Labour Party nominates him for the next election.
According to The Sun, Atiku made this statement during an interview with BBC Hausa Service.
It was recently reported by DAILY POST that Obi and Atiku had a closed-door meeting, sparking rumors about a potential merger of opposition parties ahead of the 2027 general elections.
Atiku confirmed the efforts of opposition parties to align in order to challenge the ruling All Progressives Congress (APC) in the 2027 election, saying, “We can merge to achieve a common goal. So, it’s possible and nothing can stop it if we so wish to achieve that.”
Atiku added that if the new party decides it’s the turn of the South-East and chooses Peter Obi, he would not hesitate to support him.
“I have said repeatedly, and even before the 2023 general elections, that if the PDP decides to zone the presidential ticket to the South or South-East specifically, I won’t contest it.
“But I contested the 2023 presidential ticket because it was open to all members of the party,” Atiku explained.
Isaac Oyedepo, son of Bishop David Oyedepo, founder of Living Faith Church, has admitted to having struggled with pornography at one point in his life.
Isaac revealed that he became involved with pornography during a trip to a European country.
Speaking on the podcast “Confession Box,” Isaac shared that he overcame this challenge with God’s help.
He explained: “My confessions are positive and meant to help others. I struggled with pornography before.
“I remember how it began; we traveled to a country, and I was alone in my room. I turned on the TV, and that’s how it started.
“But God helped me overcome it quickly. Many people still struggle with it, and I think if someone who had previously struggled with it had approached me and showed me how to break free, I would have overcome it sooner.
“Some topics are often avoided, but today, many pastors and church members still struggle with this issue.
“You might be anointed and performing signs and wonders, but that doesn’t mean you are living right.
“There’s an old saying that if it works, it means you’re standing right, but I found out that’s not always true. There were times I realized I wasn’t right, but grace and mercy found me.
“For the sake of someone genuine in the congregation, God can bypass you to reach that person; this is my confession.”
Former Special Prosecutor for the Special Presidential Investigation Panel for Recovery of Public Properties, Tosin Ojaomo, has petitioned the Minister of Interior, Olubunmi Tunji-Ojo, regarding an ongoing investigation by the Economic and Financial Crimes Commission (EFCC) into corruption allegations against Ahmed Audi, the Commandant General of the Nigeria Security and Civil Defence Corps (NSCDC).
Ojaomo recommended Audi’s immediate suspension to ensure public safety and protect the integrity of the investigation from possible interference.
The petition, dated May 15 and made available to DAILY POST, was addressed to Tunji-Ojo and copied to President Bola Tinubu, Attorney General Lateef Fagbemi, and EFCC Chairman Olanipekun Olukoyede.
Ojaomo highlighted that the EFCC has been investigating the NSCDC for alleged financial mismanagement, making significant progress. He also mentioned a pending allegation against Audi regarding unexplained property acquisition filed with the Code of Conduct Bureau (CBB).
Ojaomo’s request is based on Section 8 of the Nigeria Security and Civil Defence Corps Act, 2003 (as amended), and Section 11 of the Interpretation Act, 2004, which allow the minister to recommend the appointment and removal of the NSCDC Commandant General.
The petition stated, “We are compelled to make this request as the investigation of the agency cannot be thoroughly and discreetly conducted if the current Commandant General of the NSCDC is allowed to continue in office while the investigation continues because most of the financial activities of the agency which form the subject matter of the investigation are conducted under the current CG’s watch.”
He further emphasized that the suspension would safeguard the investigation process and prevent possible interference. Ojaomo cited allegations linking Audi to a company, Keltes Security and Consultancy Limited, which allegedly received contracts from Tantita Security Limited, a company under the NSCDC’s supervision.
He concluded, “In view of these facts, it will be in the interest of public safety and to protect the integrity of the office to suspend Dr. Abubakar Audi, the current Commandant General of NSCDC, so that the EFCC can conduct a thorough and discreet investigation into the matter.”
Why you shouldn’t care about what people think of you – Don Jazzy
Why I may not hesitate to support Peter Obi in 2027 – Atiku Abubakar
I once struggled with pornography – Bishop Oyedepo’s son, Isaac
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