December 29, 2023/Coronation Research

According to Nigeria’s Debt Management Office (DMO), total public debt increased marginally by 0.6% q/q or N0.5trn to N87.9trn at end-September ’23. On a y/y basis, public debt increased by 99.5%. As at end-September ’23, public debt was equivalent to 44.1% of 2022 nominal GDP.

This is above the DMOs debt-to-GDP ratio target of 40% for 2020- 2023. However, still below the limit of 55% set by the World Bank for countries within Nigeria’s peer group.

We note that Nigeria’s debt-to-GDP ratio is relatively low when compared to other African emerging economies such as Ghana (88.8%), Egypt (87.2%), South Africa (67.4%), Kenya (67.3%). We understand that plans to raise Nigeria’s debt-to-GDP ratio target is underway.

For total domestic debt, we noticed a 3.3% q/q increase to N55.9trn at end-September ’23. There were q/q increases recorded across FGN bonds (2.9% q/q), FGN Savings bond (10.5% q/q) and promissory notes (89.6% q/q).

For FY 2023, the DMO had set out to raise a maximum of N4.3trn through FGN bonds. However, based on our estimates, c.N5.8trn has been raised from cumulative FGN bond issuances (exceeding the target by 34.9%). This is 82.5% of the total domestic borrowing target of N7.04trn.

Other sources include, net NTB issuances (N2.1trn), and FGN SUKUK bonds (N350bn). Given the passage of a supplementary budget of N2.1trn, our view remains that the FGN is likely to surpass its initial domestic borrowing target by the end-2023.

The domestic debt for states and the FCT declined by -1.2% q/q to N5.7trn at end-September ’23 from N5.8trn recorded at end-June ’23. On a y/y basis, it grew by 7.1%. The most indebted states include Lagos (N960.4bn), Delta (N371.4bn), Ogun (N293.2bn), Rivers (N232.5bn) and Imo (N218.8bn).

Meanwhile, the external debt stock declined by -3.7% q/q to N31.9trn (USD41.5bn) at end-September ’23 compared with N33.2trn (USD43.1bn) recorded at end-June ’23. According to the DMO, the decline in external debt can be attributed to the redemption of a USD500m Eurobond and the payment of USD413.8m as the first principal repayments of the USD3.4bn loan secured from the IMF in 2020. Multilateral lenders such as the World Bank, IMF, AFDB, as well as bilateral lenders like China, Japan, India, and France collectively accounted for 63% of total external debt while commercial loans (Eurobonds and Diaspora bonds), and syndicated loans accounted for 37%.

Click here to read full PDF copy of report