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BIG STORY

To Accommodate Fresh Loans, FG Raises New Borrowing Limit From N33tn To N61tn

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With the new borrowing limit set by the Federal Government, Nigeria can expand its current debt portfolio from N33.11tn to N61tn.

The new borrowing limit contained in a document, Medium Term Debt Strategy, shows that Nigeria has raised its borrowing limit from 25 percent of the Gross Domestic Product to 40 percent of the GDP.

This revelation came even as the Senate gave new approvals to the Federal Government to borrow $8.33bn and €490m from external sources.

As of December 31, 2020, the National Bureau of Statistics put the country’s GDP at N152.32tn. Thus, forty percent of the current GDP is N60.93tn.

Twenty-five percent of the current GDP is N38.08tn, an amount which the nation may have surpassed in debt given that there are loans which the nation has already secured but are not included in the debt stock because they have not been drawn down.

This means that Nigeria can borrow as much as N60.93tn. Thus, with Nigeria’s current debt currently at N33.11tn, the new borrowing limit has given the country the leeway to expand its debt portfolio by up to N27.82tn.

Director-General of the Debt Management Office, Patience Oniha, confirmed the new borrowing limit in a telephone interview with one of our correspondents on Thursday.

Oniha said, “The new debt limit is 40 percent. It was approved as part of the MTDS 2020 – 2023. The document and highlights are on our website.”

The DMO boss also dismissed insinuations that the new approval given by the Senate may have taken the country beyond the set borrowing limit.

She said, “The latest loan approval is within 40 percent. Secondly, note that these loans will be disbursed over time and only what is disbursed is included in the debt stock.”

The debt strategy document said, “The debt limit was increased to accommodate new borrowings to fund budget, issuance of more promissory notes and the proposal to transfer some State Owned Enterprises’ debts, including AMCON to the FGN’s Balance Sheet in line with the IMF’s guidelines, and the proposed inclusion of ways and means.

“This limit is provided in Section 12(1) of the Fiscal Responsibility Act (FRA), 2007, and efforts are to be made to ensure compliance, except if in the opinion of the President, there is good reason to exceed the threshold, as further provided in Section 12(2) of the Act.”

The primary objective of Nigeria’s MTDS, 2020-2023 is to guide the borrowing activities of the FGN in the medium-term, the document said.

The framework compares alternative funding strategies available to the government as it pursues the desired structure of the debt portfolio that reflects the selected strategy considering the costs and risk trade-offs in the medium term.

The document said, “The main thrust of this new strategy is to moderate the level of debt-related risks, reduce the cost of debt servicing, maximize leveraging on funding from multilateral and bilateral sources, subject to availability, whilst ensuring debt sustainability, amongst other objectives.”

According to the document, the DMO is not in control of the growth in GDP and FGN revenue, but its assessment of the performance of Nigeria’s total public debt to GDP shows that the debt portfolio remains within a sustainable limit.

It said, “The ratio of Total Public Debt Portfolio to GDP was 19.00 percent as at December 31, 2019, compared to 13.02 percent in 2015, remaining within the Country-Specific Debt Limit of 25 per cent.

“Although the ratio has increased steadily due to new borrowings and slower growth of the GDP, this ratio for each of the years – 2016 to 2019, was well below the World Bank/IMF’s recommended threshold of 55 percent for countries in Nigeria’s peer group and ECOWAS convergence threshold of 70 per cent, as well as within the Country’s Specific Debt Limit of 25 per cent.”

According to the National Debt Management Framework 2018 -2022 document on the DMO website, Nigeria is a Lower-Middle-Income country.

According to the document, Debt Sustainability Analysis carried out by the DMO uses the joint World Bank/IMF Debt Sustainability Framework for Low-Income Countries.

According to this sustainability framework, medium economies on the composite indicator must have a liquidity ratio for external debt service to revenue of 15 percent.

The Head of Economics Department, Pan-Atlantic University Lagos, Dr Olalekan Aworinde, in an interview with one of our correspondents, said that there were various measures of sustainability.

He said, “There is the solvency ratio; there is also the liquidity ratio. Nigeria might be claiming to be solvent in terms of debt to GDP ratio, but we have to critically look at the debt service to revenue ratio. If it is very high, it is not good for the debt sustainability of Nigeria.

“The debt service to revenue ratio is around 72 per cent, and that shows that 72 percent of government revenue is used to service debt.

“The truth is that the government will continue to borrow, because the level of their expenditure, the total recurrent and capital expenditure, is always on the increase over the years.

“The government has to finance this expenditure; once they can only spend less than 30 percent of the revenue they are getting, the fact is that the remaining will have to be financed by some other funds, leading to a budget deficit.

“The end product is that the FG will continue to borrow, and probably sell off some of their properties or print money.

“Earlier this year, we were told that the Federal Executive Council had to rely on printing money to give to the local and state government. This is staring us back in the face: we can see it in the high level of inflation, high level of prices of goods and services in Nigeria over time. The value of the naira keeps depreciating every day. These are some of the likely possibilities in the future.”

Aworinde said that debt was good when utilized for the right purpose and that countries like the United States incur debts too, but these debts yield returns.

He added, “It has a lot of implications, there are positive sides to it and there are also negative sides to it. The government is borrowing and probably one of the reasons they want to borrow is for capital expenditure. If the debt they are incurring is for capital expenditure and it is well utilized, it will eventually translate into growth.

“More importantly the interest rate they are likely to pay back and the returns they are likely going to get on that particular investment if it is greater than the interest rate in terms of servicing it is going to be better.”

He added, “But my worry here is that if these particular debts are not used for capital expenditure if it is used for recurrent expenditure, it won’t translate to growth. “Another concern is that in the future, Nigeria will have to pay back this debt, and if that happens, they will increase the tax rate. If they are increasing the tax rate, the tendency is that it will become a burden on the future generations.”

A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said the level of revenue and usage of the loan were more important than the loan ratio to the GDP.

He said, “Are you going to be able to pay the loan you are taking? If you are saying we are safe with loans to GDP, we may not be safe as such. If we are actually a producing economy, there would not be a problem.

“I don’t worry about loans, but what have we done with the loans. We should be looking at how to have the infrastructure to help the economy to grow.”

He added that the servicing of loans in Nigeria now was taking so much chunk of the country’s money.

BIG STORY

EFCC Allegedly Places Former Edo Governor Obaseki On Watch List, Begins Contracts Probe

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Former Governor of Edo State, Godwin Obaseki, is currently on the watch list of the Economic and Financial Crimes Commission (EFCC).

This comes as we learned that the anti-graft agency has launched an investigation into various transactions, including contracts awarded during Obaseki’s tenure as governor.

Obaseki, who completed his eight-year term on November 12, had previously stated that the EFCC intended to arrest him soon after he left office.

His successor, Monday Okpebholo, has since established a 14-member State Assets Verification Committee to scrutinize Obaseki’s time in office.

In a related development, the EFCC on November 2 arrested five Edo government officials who served under Obaseki, including the Accountant General, Julius Anelu, over large withdrawals from the state treasury within a short period.

Despite the ongoing investigations, Obaseki, on November 8, expressed that he was not afraid of being probed by the EFCC. He added that he would be willing to cooperate fully with the agency and account for his tenure.

However, top sources within the EFCC, who requested anonymity because they were not authorized to speak publicly on the matter, revealed that so far, the majority of the transactions under Obaseki’s administration have not been directly linked to him.

According to one of the sources: “An investigation has commenced on his administration. He can’t just be invited until the work has got to a certain stage. Some team of crack investigators have been assigned to the case and have been trying to unravel some of the transactions, including contracts awarded under his administration.

“The bulk of the transactions, you can’t trace it to him. He made use of others. There have been leads which we have been following and we hope to get something substantial.”

When asked if Obaseki had been placed on the watch list, another source clarified that while Obaseki is part of the ongoing monitoring, all former governors are routinely watch-listed by the commission.

“All former governors are always on the commission’s watch list whether the commission has something with the fellow or not. We are not going to allow them to jet out of the country and then start going after them when we need them. So that is why we always place all of them on our watch list,” the source explained.

Efforts to reach the EFCC’s Head of Media and Publicity, Dele Oyewale, for comment were unsuccessful, as calls to his phone went unanswered. He had also not responded to a text message sent on the matter at the time of filing this report.

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BIG STORY

Sanwo-Olu Suspends Media Aide For Saying #EndSARS Arsonists Were ‘Hunted, Executed’

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Babajide Sanwo-Olu, governor of Lagos, has suspended Wale Ajetunmobi, his senior special assistant on print media, over comments he made on social media.

In a now-deleted post shared on X on November 23, Ajetunmobi claimed that several individuals involved in the burning of Television Continental (TVC) in 2020 were “hunted down and executed.”

“The full story of people who burnt down TVC in 2020 will be told one day, with gory clips and images. One thing to note: majority of them have been hunted down and executed,” he wrote.

“One of them, a young boy trading in cooking gas around Ketu, was found with AK-47 at the site. Even his neighbours were shocked. But the full gist is better saved for later.”

Ajetunmobi made the remarks in response to a post about recent comments by Reuben Abati, a former presidential aide.

X user @hamoye4real asked Ajetunmobi to clarify what he meant by “hunted down and executed.”

“What do you mean by ‘hunted down and executed’? Are you aware of extra-judicial killings?” the X user inquired.

Ajetunmobi responded: “Lol… you want to create a narrative in your head. What is extrajudicial killing here? Some of the people were chased by soldiers and exchange of fire occurred.

“Then arsonists were overpowered and killed in the process. Others ran away. Is that an extra-judicial killing to you?”

LAGOS GOVERNMENT RESPONDS

In a statement on Tuesday, Gboyega Akosile, media aide to Governor Sanwo-Olu, confirmed the suspension and emphasized that the state government does not condone extra-judicial actions.

“Mr. Ajetunmobi’s suspension follows his misrepresentation of facts on his personal ‘X’ account regarding a past incident,” the statement said.

“The Governor wishes to state categorically that his administration opposes any form of extra-judicial punishment and will not support such actions. That is not who we are. That is not our way.”

PROTESTS AGAINST POLICE BRUTALITY

In October 2020, young Nigerians took to the streets to protest against the notorious Special Anti-Robbery Squad (SARS) and police brutality.

On October 20, 2020, security forces opened fire on unarmed protesters at the Lekki tollgate in Lagos, resulting in multiple casualties.

The following day, on October 21, suspected hoodlums attacked the TVC headquarters, setting the building on fire. These attackers also targeted several police stations and other public and private properties as violence escalated in the wake of the Lekki tollgate shootings.

Reports indicate that security forces killed numerous protesters during the #EndSARS protests in Lagos.

In August 2023, a document surfaced on social media revealing that the Lagos state government had approved N61,285,000 for the “mass burial” of 103 people who died during the #EndSARS protests in the state.

The government clarified that the bodies were not from the Lekki tollgate incident.

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BIG STORY

Nigeria’s GDP Rate Grew By 3.46% In Q3 2024 — NBS

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The National Bureau of Statistics (NBS) reports that Nigeria’s annual gross domestic product (GDP) grew by 3.46 percent in the third quarter (Q3) of 2024.

In its GDP report published on Monday, the NBS noted that this growth rate is higher than the 3.19 percent recorded in Q2 2024.

The bureau also highlighted that the growth rate surpassed the 2.54 percent recorded in the third quarter of 2023.

According to the report, the performance of the GDP during the reviewed period was primarily driven by the services sector, which recorded a growth rate of 5.19 percent and contributed 53.58 percent to the total GDP.

“The agriculture sector grew by 1.14%, from the growth of 1.30% recorded in the third quarter of 2023,” the statistics firm said.

“The growth of the industry sector was 2.18%, an improvement from 0.46% recorded in the third quarter of 2023.”

“In terms of share of the GDP, the services sector contributed more to the aggregate GDP in the third quarter of 2024 compared to the corresponding quarter of 2023.”

The NBS also reported that the nominal GDP reached N71.13 trillion in Q3 2024.

Nominal GDP and real GDP both measure the total value of goods produced in a country in a year. However, while real GDP is adjusted for inflation, nominal GDP is not.

“This performance is higher when compared to the third quarter of 2023 which recorded aggregate GDP of N60,658,600.37 million, indicating a year-on-year nominal growth of 17.26%,” the bureau stated.

‘OIL PRODUCTION ROSE TO 1.47M BARRELS IN Q3 2024’

The report also revealed that the country recorded an average oil production of 1.47 million barrels per day (mbpd) in Q3 2024.

According to the NBS, this is “0.07 million bpd higher” than the production volume of 1.41 mbpd in Q2 2024 and “0.02 mbpd higher than the daily average production of 1.45 mbpd recorded in the same quarter of 2023.”

“The real growth of the oil sector was 5.17% (year-on-year) in Q3 2024, indicating an increase of 6.02 percentage points relative to the rate recorded in the corresponding quarter of 2023 (-0.85%),” the NBS said.

“Growth decreased by 4.98 percentage points when compared to Q2 2024, which was 10.15%. On a quarter-on-quarter basis, the oil sector recorded a growth rate of 7.39% in Q3 2024.”

“The oil sector contributed 5.57% to the total real GDP in Q3 2024, up from the figure recorded in the corresponding period of 2023 and down from the preceding quarter, where it contributed 5.48% and 5.70% respectively.”

‘NON-OIL SECTOR CONTRIBUTED 94.4% TO Q3 GDP RATE GROWTH’

The non-oil sector grew by 3.37 percent in real terms in Q3 2024, which is 0.62 percent higher than the rate of 2.75 percent recorded in the same quarter of 2023, according to the NBS.

The bureau also pointed out that this growth was higher than the 2.8 percent recorded in the second quarter of 2024.

“In real terms, the non-oil sector contributed 94.43% to the nation’s GDP in the third quarter of 2024, lower than the share recorded in the third quarter of 2023, which was 94.52%, and higher than the second quarter of 2024, which was 94.30%,” the NBS added.

The non-oil sector, which includes information and communication (telecommunication), trade, agriculture (crop production), financial and insurance (financial institutions), manufacturing (food, beverage, and tobacco), real estate and construction, made positive contributions to the country’s GDP growth.

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