Economy
Cost Of Living Crisis: Nigeria, Others Risk Social Unrest – AfDB
The African Development Bank (AfDB) has warned that Nigeria, Ethiopia, Angola and Kenya risk social unrest owing to the rising prices of fuel and other commodities.
The AfDB gave the warning in its macroeconomic performance and outlook for 2024 wherein it projected the continent’s economy to grow higher than the 3.2 per cent recorded in 2023.
Nigerians, in some states, including Kano, Niger, Lagos and few others, had protested against the cost of living crisis in the country, which is largely blamed on the federal government’s policies of the petrol subsidy removal and floating of the naira.
The Sultan of Sokoto and chairman of the Northern Traditional Rulers Council, Muhammad Sa’ad Abubakar III, had on Wednesday at the 6th Executive Committee meeting of the Northern Traditional Rulers Council in Kaduna, warned that with millions of Nigerian youths left without jobs and food, the country was sitting on a keg of gunpowder.
The Emir of Kano, Alhaji Aminu Ado Bayero, had, earlier on Monday, said there was serious hardship in Nigeria, asking the First Lady, Senator Oluremi Tinubu, to convey the message of the teeming populace about the hunger in the land to the president.
The emir spoke when Mrs Tinubu visited Kano to officially open the Faculty of Law building at the Maryam Abacha American University, Kano named after her.
The Minister of Agriculture and Food Security, Abubakar Kyari, had on Wednesday assured Nigerians that the government would distribute the 42,000 metric tonnes of grains free of charge.
The Nigeria Labour Congress (NLC) had, on Friday, declared a two-day nationwide mass protest on February 27 and 28. The NLC president, Joe Ajaero, said the decision to protest was taken after the expiration of the 14-day ultimatum earlier issued to the government over the nationwide hardship.
The AfDB, at the weekend, warned that internal conflicts could arise from an increase in energy and commodity prices occasioned by currency depreciation or subsidy removal referencing Nigeria, Angola, Kenya and Ethiopia, where energy subsidies were removed.
It stated, “Internal conflicts and violence could also result from rising prices for fuel and other commodities due to weaker domestic currencies and reforms.
“For instance, the removal of fuel subsidies in Angola, Ethiopia, Kenya and Nigeria and the resulting social costs has led to social unrest driven by opposition to government policy.”
The bank also said the increase in geopolitical tensions in Eastern Europe and the Middle East, coupled with the El Nino phenomenon, could trigger supply chain disruptions, which could exacerbate energy and food inflation across the world with Africa more vulnerable to these shocks.
The AfDB further warned that regional conflicts and political instability occasioned by disruptions in constitutional governments could have deleterious economic costs with resources meant for development and social support channeled into security and defence.
It also cautioned that an unconstitutional takeover of the government might lead to sanctions, which have negative implications for the economy.
Quit if you’re overwhelmed, PDP govs tell Tinubu
Governors elected on the platform of the opposition Peoples Democratic Party (PDP) have advised President Bola Ahmed Tinubu and the All Progressives Congress (APC)-led federal government to quit if they cannot provide a sustainable solution to the problems plaguing the nation.
The PDP governors gave the advice in a statement at the weekend, signed by the forum’s director-general, HCID Maduabum, reminding the APC-led government of the need to be guided by the fact that it was the APC that sought power to solve the problems of Nigeria and not to “compound them, shift blame or grandstand and use propaganda to obfuscate or confuse issues.”
The governors noted that the hardship and suffering being faced by Nigerians had no tribal, religious or party colouration, stressing that “a hungry man is an angry man.”
The governors said while all the tiers of government had a role to play, the APC-led federal government had a greater role in mobilising Nigerians and all the organs and tiers of government for sustainable solutions, adding, “If it cannot do so or is unable to do so, it should graciously throw in the towel.”
They assured that as stakeholders in governance they would continue to work collaboratively with the president in finding lasting solutions to “a very difficult situation created or exacerbated by the APC since 2015.”
When contacted for a reaction to the PDP governors’ allegations, the Special Adviser to the President on Information and Strategy, Bayo Onanuga, promised to get back to one of our correspondents, but he did not do so as of the time of filing this story.
Economy
FG services foreign debt with $3.5bn
The Federal Government spent $3.58 billion servicing its foreign debt in the first nine months of 2024, representing a 39.77 per cent increase from the $2.56bn spent during the same period in 2023.
This is according to data from the Central Bank of Nigeria on international payment statistics.
The significant rise in external debt service payments shows the mounting pressure on Nigeria’s fiscal balance amid ongoing economic challenges.
Data from CBN’s international payment statistics reveal that the highest monthly debt servicing payment in 2024 occurred in May, amounting to $854.37m.
In comparison, the highest monthly expenditure in 2023 was $641.70m, recorded in July. The sharp contrast in May’s figures between the two years ($854.37m in 2024 versus $221.05m in 2023) highlights the rising cost of debt obligations, as Nigeria battles massive devaluation of the naira.
The CBN showed significant month-on-month changes in debt servicing costs, with some months recording sharp increases compared to the previous year. A breakdown of the data revealed varied trends across the nine months.
In January 2024, debt servicing costs surged by 398.89 per cent, rising to $560.52m from $112.35m in January 2023. February, however, saw a slight decline of 1.84 per cent, with payments reducing from $288.54m in 2023 to $283.22m in 2024.
March recorded a 31.04 per cent drop in payments, falling to $276.17m from $400.47m in the same period last year. April saw a significant rise of 131.77 per cent, with $215.20m paid in 2024 compared to $92.85m in 2023.
The highest debt servicing payment occurred in May 2024, when $854.37m was spent, reflecting a 286.52 per cent increase compared to $221.05m in May 2023. June, on the other hand, saw a 6.51 per cent decline, with $50.82m paid in 2024, down from $54.36m in 2023.
July 2024 recorded a 15.48 per cent reduction, with payments dropping to $542.50m from $641.70m in July 2023. In August, there was another decline of 9.69 per cent, as $279.95m was paid compared to $309.96m in 2023. However, September 2024 saw a 17.49 per cent increase, with payments rising to $515.81m from $439.06m in the same month last year.
The data raises concerns about the growing pressure of Nigeria’s foreign debt obligations, with rising global interest rates and exchange rate fluctuations contributing to higher costs.
The global credit ratings agency, Fitch, recently projected Nigeria’s external debt servicing will rise to $5.2bn next year.
This is despite the current administration’s insistence on focusing more on domestic borrowings from the capital market.
It also estimated that approximately 30 per cent of Nigeria’s external reserves are constituted by foreign exchange bank swaps.
Regarding external debt, the agency said external financing obligation
The Federal Government spent $3.58 billion servicing its foreign debt in the first nine months of 2024, representing a 39.77 per cent increase from the $2.56bn spent during the same period in 2023.
This is according to data from the Central Bank of Nigeria on international payment statistics.
The significant rise in external debt service payments shows the mounting pressure on Nigeria’s fiscal balance amid ongoing economic challenges.
Data from CBN’s international payment statistics reveal that the highest monthly debt servicing payment in 2024 occurred in May, amounting to $854.37m.
In comparison, the highest monthly expenditure in 2023 was $641.70m, recorded in July. The sharp contrast in May’s figures between the two years ($854.37m in 2024 versus $221.05m in 2023) highlights the rising cost of debt obligations, as Nigeria battles massive devaluation of the naira.
The CBN showed significant month-on-month changes in debt servicing costs, with some months recording sharp increases compared to the previous year. A breakdown of the data revealed varied trends across the nine months.
In January 2024, debt servicing costs surged by 398.89 per cent, rising to $560.52m from $112.35m in January 2023. February, however, saw a slight decline of 1.84 per cent, with payments reducing from $288.54m in 2023 to $283.22m in 2024.
March recorded a 31.04 per cent drop in payments, falling to $276.17m from $400.47m in the same period last year. April saw a significant rise of 131.77 per cent, with $215.20m paid in 2024 compared to $92.85m in 2023.
The highest debt servicing payment occurred in May 2024, when $854.37m was spent, reflecting a 286.52 per cent increase compared to $221.05m in May 2023. June, on the other hand, saw a 6.51 per cent decline, with $50.82m paid in 2024, down from $54.36m in 2023.
July 2024 recorded a 15.48 per cent reduction, with payments dropping to $542.50m from $641.70m in July 2023. In August, there was another decline of 9.69 per cent, as $279.95m was paid compared to $309.96m in 2023. However, September 2024 saw a 17.49 per cent increase, with payments rising to $515.81m from $439.06m in the same month last year.
The data raises concerns about the growing pressure of Nigeria’s foreign debt obligations, with rising global interest rates and exchange rate fluctuations contributing to higher costs.
The global credit ratings agency, Fitch, recently projected Nigeria’s external debt servicing will rise to $5.2bn next year.
This is despite the current administration’s insistence on focusing more on domestic borrowings from the capital market.
It also estimated that approximately 30 per cent of Nigeria’s external reserves are constituted by foreign exchange bank swaps.
Regarding external debt, the agency said external financing obligations through a combination of multilateral lending, syndicated loans, and potentially commercial borrowing will raise the servicing from $4.8bn in 2024 to $5.2bn in 2025.
The anticipated servicing includes $2.9bn of amortisations, including a $1.1bn Eurobond repayment due in November.
The Small and Medium Enterprises Development Agency and economists have stated that the rise in Nigeria’s public debt might create macroeconomic challenges, especially if the debt service burden continues to grow.
The Chief Executive Officer of the Centre for the Promotion of Public Enterprises, Dr Muda Yusuf, explained that the situation could lead to a vicious circle, warning that “we don’t end up in a debt trap.”
He said, “I think there is a need for us to be very conscious of and watch the rate of growth of our public debt. Because it could create macro-economic challenges especially if the burden of debt service continues to grow.”
He maintained that there is a need for the government to reduce the exposure to foreign debts because the number has grown so due to the exchange rate.s through a combination of multilateral lending, syndicated loans, and potentially commercial borrowing will raise the servicing from $4.8bn in 2024 to $5.2bn in 2025.
The anticipated servicing includes $2.9bn of amortisations, including a $1.1bn Eurobond repayment due in November.
The Small and Medium Enterprises Development Agency and economists have stated that the rise in Nigeria’s public debt might create macroeconomic challenges, especially if the debt service burden continues to grow.
The Chief Executive Officer of the Centre for the Promotion of Public Enterprises, Dr Muda Yusuf, explained that the situation could lead to a vicious circle, warning that “we don’t end up in a debt trap.”
He said, “I think there is a need for us to be very conscious of and watch the rate of growth of our public debt. Because it could create macro-economic challenges especially if the burden of debt service continues to grow.”
He maintained that there is a need for the government to reduce the exposure to foreign debts because the number has grown so due to the exchange rate.
Economy
Oil imports drop by $1.52bn in Q2/24 – says CBN
Nigeria’s oil importation dropped to $2.79bn from $4.31bn in Q2 of 2024. This amounts to $1.52bn decline or a 35 per cent decline.
This development was contained in the Central Bank of Nigeria’s quarterly economic report for the second quarter of 2024 released recently.
This reduction highlights shifting dynamics in the nation’s oil and gas sector amid ongoing structural and economic adjustments following the removal of fuel subsidies under the administration of President Bola Tinubu.
The report also noted that the overall value of merchandise imports contracted, falling by 20.59 per cent to $8.64bn from $10.88bn recorded in Q1 2024.
The sharp decline in oil imports contributed significantly to this trend, the report noted.
The report reads: “Merchandise import decreased in Q2 2024, following the decline in the import of petroleum products. Merchandise imports decreased by 20.59 per cent to $8.64bn, from $10.88bn in Q12024.
“Analysis by composition indicated that oil imports decreased to $2.79bn, from $4.31bn in the preceding quarter.
“Non-oil imports also declined to $5.85bn, from $6.57bn in the previous quarter. A breakdown of total import showed that non-oil imports accounted for 67.72 per cent, while oil imports constituted the balance.”
Economy
Naira slumps against dollar to end on negative note
The Naira depreciated against the dollar on Friday at the foreign exchange market to end the week on a negative note.
FMDQ data showed that the weakened to N1678.87 per dollar on Friday from the N1639.50 exchange rate on Thursday.
This represents a N39.37 depreciation against the dollar compared to N1678.87 exchanged on Thursday.
Meanwhile, at the parallel market, the naira gained N10 to exchange at N1740 per dollar on Friday compared to N1750 recorded the previous day.
The development comes as Foreign Exchange transactions turnover surged astronomically to $1403.76 million on Friday from $244.96 million on Thursday, according to FMDQ data.
DAILY POST reports that in the week under review, the naira recorded mixed sentiments of gains and losses.
This showed Naira had continued to experience fluatuations in the FX marketers despite the Central Bank of Nigeria interventions.
Recall that on Wednesday, CBN authorised commercial, merchant, and non-interest banks in the country to manage tradeable foreign currencies deposited in domiciliary accounts established through the new Foreign Currency Disclosure, Deposit, Repatriation, and Investment Scheme.
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