Nigeria’s Vice President, Prof Yemi Osinbajo


The Debt Management Office DMO has said that Nigeria’s national debt stock has risen to N22.7 trillion in the first quarter of 2018, representing an increase of 4.5 per cent, attributing it to increased domestic borrowing by state governments and increased foreign borrowing by the Federal Government.

This is coming few months after the United States of America expressed deep worries over the increasing debt burden by Nigeria and many other African countries, especially less than one decade after they were granted relief by international financial institutions.

Statistics released by the DMO yesterday also show that the country’s cost of debt servicing took a quantum leap, increasing N174billion in the first quarter of 2018, which represents N173 per cent increase.

This implies that Federal Government spent a whopping sum of N724 billion on debt servicing in the first quarter of the year as against the N264.84billion in the last quarter of last year, which represents 173 per cent even as domestic debt servicing alone hit N643.6 billion in the first quarter of 2018 up from N236.04 billion in the 4th quarter of 2017 while external debt service rose by 179 per cent to $225.25 million or N81billion in Q1’18 from  $80.6 million or N29 billion in the 4th quarter of 2018.

According to the office, “The increase was accounted for largely by the increase in the Domestic Debts of States and the Federal Capital Territory (FCT), as well as, the $2.5 billion Eurobond issued in February 2018 whose proceeds were still being deployed to redeem maturing Domestic Debt.”

It however said that the debt    figures    show    that    the    implementation    of    the    debt    management    strategy which entails an increase in the External Debt Stock through new external borrowings and    the    substitution  of    high    cost    domestic    debt    with low    cost    external    debt, is achieving the desired results in several areas amongst which are:

“The share of the External Debt Stock in the Total Public Debt rose to 30 per cent as at March 31, 2018, compared to 17 per cent in 2015, 20 per cent in 2016 and 27 per cent in 2017.

“A decline in market interest rates from 13 –14 percent    per annum in December 2017 to 11 –13 per cent    per annum in the first quarter of 2018 due to the redemption of N279.67 billion of Nigerian Treasury    Bills  NTBs    using    some    of    the    proceeds    of    the    $2.5    billion Eurobond issued in February 2018.

“While the redemption of NTBs made more funds available to banks for lending to the private sector, the decline in Interest Rates implies lower cost of borrowing for the private sector. Thus, the government is actively enabling the private sector through the instrumentality of financial markets, to play a leading role in economy.”

The U.S. Department of State had during a background briefing on the first trip of Secretary of State Rex Tillerson to Africa, said such loans were unhelpful to the continent.

The department said: “in the Africa region, we are going to have a heart-to-heart discussion with the Chinese. We’ve invited the Chinese to come to Washington to talk about their programmes in Africa.

“To date, debt reduction packages under the Heavily Indebted Poor Countries HIPC, Initiative have been approved for 36 countries, 30 of them in Africa, providing 76 billion dollars in debt-service relief over time.

“And so on the one hand, the unhelpful role is the providing low-interest but really concessionary loans which really indebts the country.

“So for all of us who worked on HIPC – in other words, getting African countries post-colonial period off of debt – to see these countries re-indebted again is not only outrageous but terrible.