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External debt servicing gulps $1.62bn in five years – Punch

Amid attempts by the country to borrow more from external sources, Nigeria has in the past five years spent $1.62bn to service its external debts that include loans secured for what turned out to be white elephant projects, EVEREST AMAEFULE writes.

In the past five years, Nigeria has spent $1.62bn for servicing of external loans contracted by both the federal and state governments.

A breakdown of statistics obtained from the Debt Management Office showed that the country paid $293,003,540 for external debt servicing in 2012. The following year, the amount stood at $297,329,300.

In 2014, a total of $346,723,290 was paid to external creditors. The amount came down slightly in 2015 to $331,059,850, but moved up a bit to $353,093,540 last year.

Nigeria’s external debt stood at $6,527,070,000 on December 31, 2012. However, over the past five years, it has grown to $11,406,028,000.

This means that within the period of five years, the country’s external loan commitment has grown by 74.75 per cent.

If the service fee of $1.62bn in the past five years is checked against the principal at the peak of the debt, $11.41bn in 2016, it means that 14.21 per cent of the total has been paid in debt servicing obligations.

In 2016, 44 per cent of the debt service commitments were for multilateral loans. These include loans secured from the World Bank Group, the African Development Bank Group, Arab Bank for Economic Development in Africa, the European Development Fund, and the Islamic Development Bank.

Eighteen per cent of the amount for debt servicing was paid to bilateral agencies, including the EXIM Bank of China, French Development Agency, Japan International Cooperation Agency, EXIM Bank of India, and Kreditanstalt fur wiederaufbua.

Commercial loans consumed 26 per cent of the debt servicing commitments, while oil warrants and agency fees were responsible for the rest nine per cent.

What observers may not know is that some of the foreign loans for which the nation has been servicing were obtained for ill-conceived projects, some of which are not yet completed or have been abandoned, while the impact of others cannot be felt on the economy.

One of such white elephant projects is the National Rural Telephony Project. The project was conceived in 2001 to extend telephony services to 218 of the 774 Local Government Areas in the country.

By the time the contract for the project was awarded in 2005, the digital mobile services championed by the Global System for Mobile Communication service providers was already making waves across the country.

The contract was awarded to two Chinese firms, ZTE and Alcatel Shanghai Bell, while a $200m loan for its execution was secured from the China EXIM Bank. The implementation of the project lingered beyond the given timeframe as a result of several issues and payment of counterpart funding.

The project was said to have been poorly implemented in some locations, while in a few others, it was not implemented at all as a result of difficulties in securing project sites.

By the time the project was completed around 2007, it was clear that the government did not have a model for its management. When it eventually decided to give out the project as a concession and divided into six operations according to the geopolitical zones in the country, six firms emerged victorious.

However, that was the beginning of another controversy with letters being exchanged between the Ministry of Information and Communication, the Attorney General of the Federation, the Bureau of Public Procurement and the Infrastructure Concession and Regulatory Commission.

The consequence of the bureaucratic bottleneck is that 17 years after it was conceived, the NRTP has not been put into use and Nigeria is repaying principal for the loan borrowed for the project as well as the interest.

Another project for which a loan was secured from China is the Nigeria National Public Security Communication System. A total of $399.5m was secured from the China EXIM Bank and the contract was awarded to ZTE. The Federal Government paid a counterpart funding of $70.5m.

The project is meant to install cameras and monitoring stations in three cities of the federation and to give the police a technological capacity for monitoring and prevention of crimes. Some of the installations for the controversial project have since been vandalised.

For the Abuja Light Rail Project, the Federal Government secured $500m from the China EXIM Bank. The project has yet to be completed, that is if it has not been abandoned.

For the Nigeria Communications Satellite, a loan of $200m was secured from the China EXIM Bank. The satellite constructed by a Chinese firm was put in the orbit in May 2007.

However, the communications satellite failed in the orbit on November 8, 2008. Another satellite known as NigComSat-1R was launched into the orbit on December 19, 2011 as a replacement for the first, which developed a power problem in the orbit.

The utilisation and contribution of the satellite to the economy remain controversial as authorities in the satellite firm say that the company needs at least two more satellites to run profitably.

World Bank loans, on the other hand, are difficult to evaluate as the group concentrates on poverty alleviation projects such as in agriculture.

As Nigeria bids to secure more foreign loans, experts say the importance of the citizens monitoring the projects they are to be committed to cannot be overemphasised.

Nigeria’s debt rose 38 pct to 17.4 trln naira in 2016 -debt office – Reuters

LAGOS, March 9 (Reuters) – Nigeria’s total debt rose to 17.36 trillion naira ($56 bln) as of Dec. 2016 from 12.60 trillion naira a year earlier, the Debt Management Office said, as the country grappled with its first recession in a quarter of century caused by low oil prices.

Africa’s biggest economy expects a budget deficit of 2.36 trillion naira for 2017, with half of it funded through domestic borrowing.

It has been selling bonds and bills this year at yields below rising inflation to curb borrowing cost as it battles to kick-start the economy this year.

Foreign bonds and loans stood at $11.40 billion at the end of December, the debt office said on its website – equivalent to about 20 percent of total debt and up from $10.7 billion at the end of 2015.

Local debt spiked to 13.88 trillion naira last year, up from 8.83 trillion naira in 2015 and is set to rise further.

The government has said it will raise 130 billion naira at its third domestic debt sale this year on March 15 and sell 1.13 trillion naira worth of treasury bills by the second quarter.

Nigeria also plans to issue a new savings bond this month targeted at retail investors to broaden its funding base followed by a 20 billion naira “green bond” sale in April.

It sold a $1 billion Eurobond last month and wants to sell another for $500 million. The government aims to issue a $300 million diaspora bond abroad this year and sell its first sovereign sukuk in the local market.

In December, President Muhammadu Buhari, presented a 7.3 trillion naira budget for 2017 to parliament, an increase of 1.22 trillion naira from 2016.

($1 = 310.00 naira) (Reporting by Chijioke Ohuocha; editing by John Stonestreet)

 

Nigeria plans new savings bonds aimed at retail investors – Reuters

By Chijioke Ohuocha

LAGOS, March 1 (Reuters) – Nigeria plans to target retail investors with a new savings bond that will go on sale this month, the Debt Management Office said on Wednesday.

Two- and three-year maturities will be offered, with interest paid quarterly. The interest rate has yet to be announced, but the debt office paid 16.5 percent on a five-year bond sold to institutional investors last month.

The bonds will be “good for savings towards retirement, marriage, school fees, house projects,” the debt office said.

Savings accounts at Nigeria’s commercial banks pay up to 5 percent in interest, but the country’s inflation is running at more than 18 percent annually.

The bond offer will open on March 13 and end after five days, the debt office said. New issues will be sold every month. The minimum subscription will be 5,000 naira ($16) and the maximum 50 million naira. Nigeria’s government depends on local borrowing to fund more than half its budget deficit, which is expected to reach 2.36 trillion naira this year.

It issued a $1 billion Eurobond last month and is now seeking approval from parliament for an additional $500 million Eurobond. Last week, it said it would offer a 20 billion-naira “green bond” in April.

The government also plans to sell a $300 million diaspora bond abroad this year and its first sovereign sukuk in the local market.

($1 = 305.00 naira) (Editing by Larry King)

 

Nigeria raises 160 bln naira bonds at yields below inflation – Reuters

By Oludare Mayowa

LAGOS Feb 16 (Reuters) – Nigeria has raised 160 billion naira ($525 million) in local currency bonds at its second debt auction this year at yields lower than the inflation rate in Africa’s biggest economy, the Debt Management Office said on Thursday.

The debt office had initially want to raise 110 billion at the auction but increased the offer due to demand.

Total demand stood at 337.03 billion naira at Wednesday’s auction, higher than 235.05 billion naira at its previous sale.

Annual inflation in Nigeria climbed to high of 18.72 percent in January, its 12th straight monthly rise. The trend was worsened by dollar shortages, which have crippled the import-dependent economy and triggered its first recession in 25 years.

The government is also facing funding challenges brought on by the low price of oil. It expects the budget deficit to widen to 2.36 trillion naira this year as it tries to spend its way of out of the recession.

More than half of the deficit will be funded through local borrowings, the government has said.

The debt office said it raised 70 billion naira of the paper maturing in 2036 at 16.77 percent, lower than 16.99 percent same instrument fetched at the previous auction and paid 16.61 percent for the 30 billion naira raised in the paper maturing in 2026 compared to 16.99 percent at the previous auction.

It issued 60 billion naira in the note maturing in 2021 at 16.55 percent against 16.89 percent at the previous auction.

Nigerian government issues local currency bonds every month to raise funds to support its spending plan, which also goes to help the banking system manage liquidity. (Reporting by Oludare Mayowa; Editing by Toby Chopra)

 

Nigeria raises local currency bonds at yields below inflation – Reuters

LAGOS Jan 19 (Reuters) – Nigeria has raised 214.95 billion naira ($704.18 mln) in local currency bonds at its first auction this year, with the debts sold at yields below galloping inflation, the Debt Management Office said on Thursday.

Though yields were higher than at its last auction in December, the debt office said it received subscription of 235.05 billion naira for the bonds at the auction held on Wednesday.

Annual inflation in Nigeria climbed to a more than 11-year high of 18.55 percent in December, its eleventh straight monthly rise. The trend was worsened by dollar shortages, which have crippled the import-dependent economy and triggered its first recession in 25 years.

The government is also facing funding challenges brought on by the low price of oil. It expects the budget deficit to widen to 2.36 trillion naira this year as it tries to spend its way of out of the recession.

More than half of the deficit will be funded through local borrowings, the government has said.

The debt office on Thursday said it raised a 105.10 billion naira bond maturing in 2036 at 16.99 percent compared with 16.43 percent at its last sale.

It issued a 2026 bond to fetch 74.90 billion naira at 16.99 percent as against 16.24 percent last month and sold the 2021 note for 34.95 billion naira at 16.89 percent compared with 15.99 percent in December, the debt office said.

Nigerian government issues local currency bonds every month to raise funds to support its spending plan, which also goes to help the banking system manage liquidity.

($1 = 305.25 naira) (Reporting by Oludare Mayowa; Writing by Chijioke Ohuocha; Editing by Tom Heneghan)

 

Nigeria to raise 130 bln naira bonds on Jan. 18 -debt office – Reuters

LAGOS Jan 11 (Reuters) – Nigeria plans to auction 130 billion naira ($426 million) in local currency-denominated bonds on Jan. 18, its first debt sale this year, the Debt Management Office said on Wednesday.

The debt office said it would issue 40 billion naira apiece in bonds maturing in 2021 and 2036, and 50 billion naira of paper maturing in 2026, using the Dutch auction system.

Settlement for the bond sale is expected on the following day. All the bonds on offer are reopenings of previous issues.

Africa’s top crude producer and biggest economy issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit.

Last week, it said it plans to issue 340 billion to 430 billion naira worth of bonds during the first quarter.

The government has proposed a 2017 budget deficit of 2.36 billion naira for this year, which it aims to fund by borrowing 1.254 trillion naira domestically and 1.067 trillion naira abroad.

($1 = 305 naira) (Reporting by Oludare Mayowa; Editing by Catherine Evans)

 

Nigeria to sell up to 430 billion naira of bonds in Q1, debt office says – Reuters

LAGOS Jan 6 (Reuters) – Nigeria plans to issue 340 billion to 430 billion naira ($1.12 billion to $1.41 billion) of local-currency bonds during the first quarter, the Debt Management Office said on Friday.

The debt office said on its website it would auction 110 billion to 140 billion naira worth of bonds maturing in 2021 and 85 billion to 105 billion naira in debt maturing in 2026. It will also sell 45 billion to 55 billion naira in bonds maturing in 2027 and 100 billion to 130 billion naira of the 2036 debt.

According to the debt issuance calendar, the 2027 bond will be a new issue, in March. The rest will re-open previously issued debt, starting after Jan 18.

Africa’s biggest economy has proposed a 2017 budget deficit of 2.36 billion naira for this year. The government hopes to fund it by borrowing 1.254 trillion naira domestically and 1.067 trillion naira abroad.

But the government has already struggled to fund the 2016 budget after a planned Eurobond sale and World Bank loan were delayed.

($1 = 304 naira) (Reporting by Oludare Mayowa, editing by Larry King)

 

DMO sets 2017 debt limit for FG – Today

The Debt Management Office has fixed the maximum limit for the federal government’s domestic and external borrowing at 22.08 billion dollars for the 2017 fiscal year.

This is part of policy recommendations of the Debt Management Office contained in its 2016 report of the annual national debt sustainability analysis.

According to the management office, new domestic borrowing has been pegged at 5.52 billion dollars, while new external borrowing is put at 16.56 billion for 2017.

The report explains that, the present value of ‘total public debt to GDP’ ratio for 2016 for the federal government is projected at 13.5 percent with an available borrowing space of 5.89 percent of the estimated GDP of 374.95 billion dollars for 2017.

The management office also recommends that government should explore other alternative and viable sources of financing for the country’s huge infrastructure requirements.

Nigeria can borrow a maximum of $22.08 bln in 2017 – Reuters

By Chijioke Ohuocha

LAGOS Oct 26 (Reuters) – The maximum amount that Nigeria can borrow in 2017 from both local and foreign sources is $22.08 billion without it violating its debt threshold, the Debt Management Office (DMO) said.

Nigeria has a borrowing space of 5.89 percent of its GDP of $374.95 billion which will take its debt limit to a country-specific threshold of 19.39 percent of its total public debt-to-GDP ratio, it said in a report.

Total public debt-to-GDP ratio for 2016 is projected at 13.5 percent, it said in a debt sustainability report seen by Reuters on Wednesday. It said total public debt-to-revenue stood at 28.10 percent as of 2015, slightly higher than 28 percent threshold.

President Muhammadu Buhari has asked parliament to approve $30 billion of foreign borrowing to fund planned infrastructure projects until 2018, according to a letter read out to lawmakers on Tuesday.

Nigeria’s public debt stood at 16.29 trillion naira as of June 2016, up from 12.60 trillion naira by end December.

“Although the level of debt stock is still appreciably low relative to the country’s aggregate output (GDP), the debt portfolio remains mostly vulnerable to the various shocks associated with revenue, exports and substantial currency devaluation,” the DMO said in the debt sustainability analysis report.

The DMO said the debt sustainability analysis showed that Nigeria’s debt position deteriorated in 2016 and slipped from a low-risk of debt distress to a Medium-risk of debt distress. (Reporting by Chijioke Ohuocha; Editing by Angus MacSwan)