Amid a $151.3 billion public debt, here are Nigeria’s biggest creditors

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As of June 2022, Nigeria’s public debt is in the billions of dollars and most creditors are Nigerian.

According to data from the Central Bank of Nigeria (CBN), total public debt in Nigeria is estimated at $151.3 billion as of June 2022, relative to an estimate of $103.3 billion reported by the Office of Credit Management. Debt (DMO).

The difference is a whopping N20 trillion ($48 billion) from the CBN in Ways and Means loans to the government, which further increased to N22 trillion as of September.

The DMO has yet to classify the amount as part of Nigeria’s public debt, although there are plans to convert it into a 100-year bond.

Our estimates also assume the official exchange rate of N414/$1 used by the Debt Management Office.

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The federal and state governments have a mix of internal and external debts. Internal debt is made up of FGN titles, Treasury bills and, more recently, CBN Ways and Means. In the foreign scenario, Nigeria has debts with countries (bilateral debts) and multilateral institutions such as the World Bank, the IMF and the African Development Bank.

Internal Debt: The federal and state governments borrow money by issuing bonds on the domestic market in the local currency, the naira.

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  • Bonds are also listed on the Nigerian Stock Exchange or FMDQ, where traders can buy and sell bonds.
  • According to the DMO data, Nigeria’s total domestic debt is about N26.3 trillion of which states owe N5.2 trillion.
  • Most of the debts are denominated as FGN Bonds, State Bonds, Sukuks, Treasury Bills and Green Bonds.
  • More recently, the Nigerian central bank reported a further increase N20 trillion as of June 2022a debt on which the government largely depends.

External debt: The latest data as of June 2022 confirms that Nigeria’s total external debt stock is $44.6 billion, up from $43.1 billion in December 2021.

  • Nigeria’s foreign debt is owned by various countries and institutions and according to our records Eurobonds make up the largest part with about $15.6 billion about 36% of the indebtedness of the external debt of the government.
  • They are followed by multilateral institutions such as the World Bank and the IMF with some 13,000 million dollars and 3,200 million dollars, respectively.
  • The AFDB, which Nigeria partly owns as one of its major shareholders, lent Nigeria about $2.8 billion in loans.
  • Nigeria is also in debt to some five countries that owe them a combined total of $4.73 billion as of June 2022. China is owed the most with about $3.95 billion or about 83.5% of the total owed to the countries.
  • This makes China the only Nigerian lending country in the world.

Nigeria’s largest creditors: Having looked at all the data, what is clear is that Nigeria’s biggest creditors are Nigerians.

  • Government securities add up to around N26 trillion or $50.5 billion (assuming the official exchange rate), and this is due to pension funds, banks, mutual funds, companies, fundraising investment schemes, etc. All are represented by contributions made by Nigerians.
  • From their June net asset value data, the pension funds alone hold over N9 trillion worth of FGN, Treasury bills, Sukuk and agency bonds.
  • After the Nigerians, the next biggest creditor in the booing is the central bank with over N20 trillion in Ways and Means loans.

What does this mean: Nigeria’s total public debt of about N62.8 trillion is about 33% of the country’s gross domestic product, which is within limits by international standards.

  • More importantly, Nigeria is highly exposed to debts owed to Nigerians with around 73% of debts in local currency.
  • This effectively means that the Nigerian government has better control over how it manages its internal debts. You can, for example, in an unlikely situation where you are unable to pay local debts as they come due, print more naira to meet this obligation.
  • Only 27% of the total value of the debts are in foreign currency for a total of $40 billion. Most of the debts are also medium and long-term Eurobonds and owed to various creditors.
  • While this is a manageable number, it is more than Nigeria’s foreign reserves and is becoming expensive to maintain.

Nigerian is not in any favorable position take on more external debt at current rates considering the state of government revenues. However, to address its large budget deficits, it is likely to continue borrowing from the central bank and issuing more FGN securities, further exposing Nigeria to its governments.

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