LCCI Predicts Nigeria’s Debts May Hit N45tn in Q4 2022

•This year budget now projected to have deficit of N7.35 trillion

Gilbert Ekugbe

The Lagos Chamber of Commerce and Industry (LCCI) has predicted that Nigeria’s total debt stock was expected to hit N45.86 trillion by December 2022.

According to the President, LCCI, Mr. Michael Olawale-Cole, who spoke at a press briefing on the state of the nation, the country’s debt stock was expected to increase following the federal government’s plan to borrow an additional N1.6 trillion, while the 2022 debt target for domestic borrowing was pegged at N2.57 trillion.

He said: “There is also a plan to borrow N2.57 trillion from foreign creditors, while N1.16 trillion is expected from multilateral/bilateral drawdowns.

“In total, the federal government plans to add N6.3 trillion new debts to the current debt stock, which would push the country’s total debt stock to N45.86 trillion by December 2022,” he added.

The LCCI boss noted that the 2022 federal government budget was now projected to have a deficit of N7.35 trillion from the approved N6.26trillion if the recent request for an additional deficit of N965.4billion by the president presented to the National Assembly was granted, explaining that in total, adding that with the new debts, the country was likely to have a higher debt service-to-revenue ratio if revenue levels do not increase significantly.

Furthermore, he predicted tougher times ahead for the manufacturing sector of the economy going into the second quarter of the year, predicting that manufacturing concerns would likely suffer due to poor public infrastructure, and port-related challenges as these may continue to present as headwinds to the sector’s performance.

“Additionally, with the war in Ukraine aggravating disruptions to supply chains of raw materials like wheat, barley, soybeans, sunflower, and corn, the rising cost of production may not abate soon,” he added.

On the power sector, he said it was becoming clearer that the national grid cannot supply sufficient power to meet the nation’s electricity demand, lamenting that on the back of the epileptic power supply, businesses have had to deal with the rising cost of manufacturing, exorbitant logistics, and constrained production.

He added that with the cost of diesel at record levels and persisting poor power supply, businesses had been running on unsustainable costs and producing at uncompetitive prices.

He warned that the situation could lead to job losses as output is constrained due to the unbearable cost of production.

“If not quickly tackled, these challenges will likely subdue the GDP growth potentials and projections for 2022,” he warned.

The LCCI boss added: “The government should create funding for critical infrastructure and special purpose intervention in the power sector. The newly launched Infrastructure Corporation of Nigeria (Infracorp) has a mandate to focus on power, renewables, transport, and logistics. The InfraCorp will succeed in mobilizsng private sector participation if we can achieve cost-reflective pricing in the power sector,” he said.

“The gas-to-power infrastructure requires an overhaul to resolve the persisting gas shortage. However, the most sustainable solution to Nigeria’s power shortages is the transition to renewable energy,” he advised.