Experts: Nigeria’s Debt Level to Remain Elevated in the Short to Mid-term

Nume Ekeghe

Experts in the financial service sector have predicted a notable upward trajectory in Nigeria’s total public debt following a modest increase of 0.61 per cent quarter-on-quarter (QoQ).

Nigeria’s debt rose from N87.38 trillion at the end of Q2, 2023 to N87.91 trillion by September 30, 2023.

In a port, analysts at Merristem said these trends suggest an expected continued rise in Nigeria’s debt in the near future

The report noted that with the domestic debt increase by N1.80 trillion, reaching N50.20 trillion in Q3, 2023 suggest a sustained high level of national debt in the short to medium term, with expectations of increased domestic borrowing by the government.

According to the report: “According to data from the Debt Management Office (DMO), Nigeria’s total public debt registered a slight increase +0.61 per cent QoQ, rising from N87.38 trillion at the close of Q2, 2023 to N87.91 trillion as of September 30, 2023. The domestic debt stock of the country increased by N1.80 trillion, reaching N50.20 trillion in Q3, 2023.”

“However, the external debt decreased, attributed to the redemption of a $500.00million Eurobond and the payment of $413.86million as the first principal repayment of a $4.30billion obtained from the International Monetary Fund (IMF) in 2020. We anticipate the nation’s debt level to remain elevated in the short to mid-term, with expectations of additional domestic borrowings by the government.”

They added,  “The National Bureau of Statistics (NBS) released data indicating a slight increase in Nigeria’s unemployment rate to 4.20 per cent in Q2, 2023 from 4.10 per cent in the preceding quarter. Notably, youth unemployment 15 to 24 years witnessed a 30bps uptick, rising to 7.20 per cent from the 6.90 per cent recorded in Q1, 2023.

Furthermore, on related domestic economic highlights, it noted that in Q2, 2023, the employment-to-population rate stood at 77.10 per cent, “while the proportion of the employed population classified as underemployed decreased from 12.20 per cent in Q1 to 11.80 per cent during the same period; simultaneously, AIICO Insurance Plc obtained a 5.00 per cent stake in Infrastructure Credit Guarantee Company Limited, becoming the second domestic institutional investor welcomed by the institution, after Leadway Assurance Plc’s inaugural investment, aligning with InfraCredit’s objective to augment private sector involvement in its ownership.

“The employment-to-population rate was reported at 77.10 per cent in Q2, 2023. Additionally, there was a decrease in the share of the working population classified as underemployed, dropping from 12.20 per cent in Q1 to 11.80 per cent in the period under review. On the corporate scene, AIICO Insurance Plc has secured a 5.00 per cent stake in Infrastructure Credit Guarantee Company Limited, making it the second domestic institutional investor to be admitted by the infrastructure credit guarantee institution, following Leadway Assurance Plc’s initial investment. This move supports InfraCredit’s goal to enhance private sector participation in its ownership structure.”