Finance
Is Nigeria at the risk of domestic debt crisis?
…no DG DMO; we are close Okonjo-Iweala
By Omoh Gabriel
A total of $2.335billion was spent by the federal government to service both internal and external debt in 2009. This amounted to about 50 per cent drop in the amount used for debt service by Nigeria in the previous year 2008 which amount stood at $4.055billion. Before the debt relief of 2006, Nigeria spent $8.0429 billion to service debt in 2006 and $10.1072 billion in 2005.
Figures released by the Director General Nigeria Debt Management Office Dr Abraham Nwankwo on Tuesday showed that in 2005 Nigeria used $8.940 billion to service its external debt paying only $1.1662 billion to residents in Nigeria as domestic debt service. Nigeria’s obligation to foreign creditors in terms of debt service dropped slightly in 2006 to $6.729 billion while what it used to settle due domestic debt and interest on outstanding loans inched up to $1.3137 billion. With debt relief in 2006 its obligations to foreign creditors in terms of debt service nose dived south ward paying only $1.022 as external debt service and $2.1629 billion as domestic debt service. From the Debt Management official data the external debt obligations of the country further went south with a payment of $464.63 million but the domestic figure shot up to $3.590 billion in 2008. In 2009 for which complete records are available external debt service obligations of the federal and state governments stood at $428 million while domestic debts service stood at $1.907 billion.
A break down of the debt service payment showed that the Paris club was paid $8.070 billion in 2005, non Paris club members received $11.39 million while multilateral institutions were paid $471.67 million thus adding up to $8.553 billion. London club made up mainly of oil warrants were paid $169.86 million, promissory notes $213.55 million and others including non Paris Commercials were serviced with $3.67 million thus giving a total debt service figure of $8.940 billion in 2005.
According to the Debt Management Office figures in 2006 while the sum of $4.51987 billion was paid to the Paris club of creditors as debt service, $25.56 million was paid to non Paris club creditors, $426.62 to multilateral institutions, $1.5845 billion to London club, $170.84 to redeem promissory notes and $1.60 million to non Paris commercials thus giving debt service figure of $6.729 billion in 2006. In 2007 debt management office data suggest that northing was paid to the Paris club of creditors as Nigeria had successfully exited the clutches of the club but the sum of $27.48 million was used to service debt owed non Paris club of creditors. Multilateral were paid $392.77 million as debt service, London club of creditors members in 2007 were paid from the federal government coffer the sum of $102.59 million as debt service while payment to redeem promissory notes stood at $476.6 million and others were paid $22.6 million thus giving a total debt service obligation to $1.022 billion. For the fiscal year 2008, Paris club had no single amount paid to it, non Paris club members of sovereign debts were paid $6.63 million, $380.63 million to multilateral, while London club of creditors were paid the sum of $41.72 million, $35.65 million was paid to other creditors thus making up the $464.63 million that was used to service external debt in 2008. The trend for 2009 was not too different from that of 2008 and 2007 as northing was paid to the Paris club of creditors while the sum of $12.66 million was used to service non Paris members; Multilateral institutions were paid from the nation’s coffer $260.52 million, London club $41.72 million and others $113.13 million bring the total debt service paid out in 2009 to $428.04 million.
Nigeria debt management Office Director General says Nigeria is not any where near the 40 per cent threshold of allowable debt to gross domestic product ratio. But the federal government in 2008 used a total of N238.753 billion to service its domestic debts. This rose to N281.540 billion in 2009. A breakdown of the debt service showed that N149.2 billion was paid as interest on FGN bond and N193.787 billion for the same in 2009. In 2008 the government paid N916.72 million as call premium on local contractors debts. Interest paid on treasury bills in 2008 amounted to N43.555 billion but dropped to N38.788 billion in 2009. Government in 2008 paid interest of N39.22 billion on treasury bonds and N38.711 billion for the same in 2009. Principal payment of treasury bond was N5.670 billion in 2008 and N10.187 billion in 2009. Interest paid on Federal Government Development stocks in 2008 was N69.88 million as against the N65 million paid in 2009. Principal payment for the development stock in 2008 was N100 million.
As at 2009 the ratio of external debt service to total debt stock was 18.33 per cent as against domestic debt which was 81 per cent of debt service payment. In real terms for every one naira the government spent on debt service 18.33 kobo went out of the country while 81.67 kobo was used to pay local debt that fell due and the interest on such facilities.
There has been a steady rise in domestic debt stock from 2005 to date, except for 2008 when a marginal decrease was recorded. The domestic debt in 2005 was $11.83 billion, 2006 – $13.81 billion, 2007 – 18.58 billion, 2008 – $17.69 billion and $ 21.87 billion in 2009 The figures for the external debt stocks, however, show that $20.48 billion was recorded in 2005, $3.54 billion in 2006, $3.65 billion in 2007, $3.72 billion in 2008, while $3.95 billion was recorded as external debt in 2009. A cursory look at Nigeria debt stock showed that while in 2005 the total debt stock was $32.306 billion, it dropped to $17.349 billion in 2006, $22.229 billion in 2007, $21.398 billion in 2008 and $25.817 billion in 2009.
World Bank Managing Director Dr. Ngozi Okonjo Iweala, one time minister of Finance of Nigeria warns that the rate at which domestic debt is rising will hurt the nation’s economy if not arrested.
In her view “The problem we have is with domestic debt. We have accumulated, I do not want to quote the figure, I believe it is up to $26 billion equivalent in domestic debt. That is debt we are taking within the country. That is what we need to focus on. Any time we talk about debt in Nigeria people start shouting about external debt. The external debt is very low. Nigeria has to pay attention to domestic debt and stop accumulating that.
“They think because it is domestic it cannot come and harm the economy that is not true, if you accumulate lots of domestic debt, you start clouding out the private sector, when the public sector enters in all the time. I think the level we are now if we can sort of level off there, that is okay. Nigeria should not accumulate any more domestic debt because it is going to lead to the some ills we came out from. It is not only external debt that leads to choking off economic growth and clouding out the private sector. We have exited the debt trap; we owed $30 billion to the Paris club at that time that has been taken care of okay, so we have exited those who are saying that external debt is the problem that is not the case. Internal debt is the problem”.
But Dr. Ibrahim Nwankwo Director General Debt Management office thinks differently. He asserts that the federal government has vowed to keep the debt stock at 25 per cent of the Gross Domestic product and not more. He argued that countries in the same league with Nigeria can leverage on 40 per cent debt GDP ratio. Total debt to GDP ratio was 28.6 per cent in 2005. When Nigeria got the famous debt relief from the Paris club of creditors the ratio dropped significantly to 12.39 per cent in 2006. It was 11.67 per cent in 2007, 11.77 peer cent in 2008 and 13.88 per cent in 2009. Nwankwo says it is 16.8 per cent in 2010.
Nwankwo admits that Nigerians must and should be concerned about the profile of public debt and should raise questions and seek clarification at all times. However the total public debt of the federal government, comprising both external and securitised domestic debt, rose by $6.7 billion (about N1.005 trillion) in the last ten months, from $25.82 billion as at end of December, 2009 to $32.5 billion as at end of September 2010.
Dr. Abraham Nwankwo, who stated this at a media chat in Lagos, also disclosed that two book runners have been short-listed for appointment next week, for Nigeria’s planned sale of $500 million Eurobond before the end of the year. Nwankwo noted that the domestic debt stock constitutes the bulk of the total public debt at $28 billion, accounting for about 86 percent of the total while the remaining $4.5 billion is for external debt.
Nwankwo also debunked the insinuation that the interest rates on Nigeria’s external borrowing are as high as 20 per cent. He asserted that interest rates on external debts are just about 1.25 per cent, adding that the Debt/GDP ratio for the country at the moment is 16.8 per cent whereas the prevailing ratio among countries of similar economy to Nigeria is 40 per cent.
On the move by the federal government to raise Euro bond from the international capital market, Nwankwo stated: “Two firms have been short listed as book-runners, and they will also serve as the issuing houses. The federal ministry of finance will announce the names of the firms next week”, adding that as soon as the two companies chosen to serve as book-runners are announced, Nigeria will expect to harvest the money by the middle of December.
He averred that notwithstanding the recent revision of Nigeria’s credit outlook to negative from stable by ratings agency Fitch, the bond is expected to be over-scribed. “It is likely to be over-subscribed. We’ve seen interest from the U.S., Europe and Asia. Many investors are already eager for the bonds. We will raise the bond very comfortably. The $500 million is very small compared to what we do every month on the domestic market,” he said.
Nwankwo also disclosed that the DMO has assisted 13 States spread across the six geo-political zones to complete their domestic debt data reconstruction exercises. This, he said, has placed the states in the vantage position of having a harmonised computerised total public debt database which indicates total State debt obligations vis-a-vis available resources and other State commitments at a specified period in time.
He said that the 13 states that have completed the domestic data reconstruction, which he refrained from naming, have accumulated domestic debt profile of about N200 billion. In the mean time, Ratings agency Standard & Poor’s yesterday affirmed its ‘B+’ long-term and ‘B’ short-term foreign and local currency sovereign credit ratings on Nigeria, with a stable outlook. “The outlook is stable, reflecting our expectation that Nigeria will maintain its strong external and fiscal balance sheet and that its budgetary performance will gradually improve over the next few years. We consider that the ratings on Nigeria are constrained by high political risk, but supported by a strong balance sheet,” S&P said in a statement.
Finance
Afreximbank successfully closed its second Samurai Bond transactions, raising JPY 81.8bn or $527m
African Export-Import Bank said it has successfully closed its second Samurai bond transaction, securing a total of JPY 81.8 billion (approx. USD 527 million) through Regular and Retail Samurai Bonds offerings.
The execution surpasses the Bank’s 2024 debut issuance size, attracting orders from more than 100 institutional and retail investors, marking a renewed demonstration of strong Japanese investor confidence in the Bank’s credit and its growing presence in the yen capital markets.
On 18 November, Afreximbank priced a JPY 45.8 billion 3-year tranche in the Regular Samurai market following a comprehensive sequence of investor engagement activities leveraging Tokyo International Conference on African Development (TICAD9), including Non-Deal Roadshows (NDRs) in Tokyo, Kanazawa, Kyoto, Shiga and Osaka, a Global Investor Call, and a two-day soft-sounding process which tested investor appetite across 2.5-, 3-, 5-, 7-, and 10-year maturities.
With market expectations of a Bank of Japan interest rate increase, investor demand concentrated in shorter tenors, resulting in a focused 3-year tranche during official marketing.
The tranche attracted strong participation from asset managers (22.3%), life insurers (15.3%), regional corporates, and high-net-worth investors (39.7%).
Concurrently, Afreximbank priced its second Retail Samurai bond on 18 November, a JPY 36.0 billion 3-year tranche, more than double the inaugural JPY 14.1 billion Retail Samurai issuance completed in November 2024.
The 2025 Retail Samurai bond also marks the first Retail Samurai bond issued in Japan in 2025.
Following the amendment to Afreximbank’s shelf registration on 7 November 2025, SMBC Nikko conducted an extensive seven-business-day demand survey through its nationwide branch network, followed by a six-business-day bond offering period.
The offering benefited from strong visibility supported by Afreximbank’s investor engagement across the country, including the Bank’s participation at TICAD9, where Afreximbank hosted the Africa Finance Seminar to introduce Multinational Development Bank’s mandate in Africa and its credit profile to key Japanese institutional investors.
MBC Nikko Securities Inc. acted as Sole Lead Manager and Bookrunner for both the Regular and Retail Samurai transactions. Chandi Mwenebungu, Afreximbank’s Managing Director, Treasury & Markets and Group Treasurer, commented:
“We are pleased with the successful completion of our second Samurai bond transactions, which marked a significant increase from our inaugural Retail Samurai bond in 2024, and which reflect the growing depth of our relationship with Japanese investors.
The strong demand, both in the Regular and Retail offerings, demonstrates sustained confidence in Afreximbank’s credit and mandate.
We remain committed to deepening our engagement in the Samurai market through regular investor activities and continued collaboration with our Japanese partners.”
Finance
Ecobank unveils SME bazaar: a festive marketplace for local entrepreneurs
Ecobank Nigeria, a member of Africa’s leading pan-African banking group, has announced the launch of the Ecobank SME Bazaar—a two-weekend festive marketplace designed to celebrate local creativity, empower entrepreneurs, and give Lagos residents a premium shopping experience this Detty December. The Bazaar will hold on 29–30 November and 6–7 December at the Ecobank Pan African Centre (EPAC), Ozumba Mbadiwe Road, Victoria Island, Lagos. Speaking ahead of the event, Omoboye Odu, Head of SMEs, Ecobank Nigeria, reaffirmed the bank’s commitment to supporting small and medium-sized businesses, describing them as the heartbeat of Nigeria’s economy. She explained that the Ecobank SME Bazaar was created to enhance visibility for entrepreneurs, expand market access, and support sustainable business growth.
According to her, “This isn’t just a market—it’s a vibrant hub of culture, commerce, and connection. From fresh farm produce to trendy fashion, handcrafted pieces, lifestyle products, and delicious food and drinks, the Ecobank SME Bazaar promises an unforgettable experience for both shoppers and participating SMEs. Whether you’re shopping for festive gifts, hunting for unique finds, or soaking in the Detty December energy, this is the place to be.” Ms. Odu added that participating businesses will enjoy increased brand exposure, deeper customer engagement, and meaningful networking opportunities—making the Bazaar a strong platform for both festive-season sales and long-term business growth. The event is powered by Ecobank in partnership with TKD Farms, Eko Marche, Leyyow, and other SME-focused organisations committed to building sustainable enterprises.
Finance
16 banks have recapitalised before deadline—CBN
The Central Bank of Nigeria (CBN) has said that16 banks have so far met the new capital requirements for their various licences, some four months before the March 31, 2026 deadline. The apex bank also indicated that 27 other banks have raised capital through various methods in one of the most extensive financial sector reforms since 2004. Addressing journalists at the end of the Monetary Policy Committee (MPC) meeting in Abuja, CBN Governor Mr Olayemi Cardoso said the banking recapitalisation was going on orderly, consistent with the regulator’s expectations. He said, “We are monitoring developments, and indications show the process is moving in the right direction.” Nigeria has 44 deposit-taking banks, including seven commercial banks with international authorisation, 15 with national authorisation, four with regional authorisation, four non-interest banks, six merchant banks, seven financial holding companies and one representative office.
Cardoso explained that eight commercial banks had met the N500 billion capital requirement as of July 22, 2024, rising to 14 by September of the same year. The number has now increased to 16 as the industry continues to race toward full compliance. He said that the reforms would reinforce the resilience of Nigerian banks both within the country and across the continent. “We are building a financial system that will be fit for purpose for the years ahead. Many Nigerian banks now operate across Africa and have been innovative across different markets. These new buffers will better equip them to manage risks in the multiple jurisdictions where they operate,” Cardoso said. According to him, the reforms would strengthen the financial sector’s capability to support households and businesses. He said, “Ultimately, this benefits Nigerians—our traders, our businesses and our citizens—who operate across those regions. “It should give everyone comfort to know that Nigerian banks with deep local understanding are present to support them. Commercial banks are also creating their own buffers through the ongoing recapitalisation.”
He added that the apex bank considered several factors in determining the new capital thresholds, including prevailing macroeconomic conditions, stress test results and the need for stronger risk buffers. He reassured on the regulator’s commitment to strict oversight as the consolidation progresses. “We will rigorously enforce our ‘fit and proper’ criteria for prospective new shareholders, senior management, and board members of banks, and proactively monitor the integrity of financial statements, adequacy of financial resources, and fair valuation of banks’ post-merger balance sheets,” Cardoso said. He said the CBN remained confident that the banking system would emerge stronger at the conclusion of the recapitalization exercise, with institutions better prepared to support Nigeria’s economic transformation Banks have up till March 31, 2026 to beef up their minimum capital base to the new standard set by the apex bank. Under the new minimum capital base, CBN uses a distinctive definition of the new minimum capital base for each category of banks as the addition of share capital and share premium, as against the previous use of shareholders’ funds.
While most banks have shareholders’ funds in excess of the new minimum capital base, their share premium and share capital significantly fall short of the new minimum definition. The CBN had in March 2024 released its circular on review of minimum capital requirement for commercial, merchant and non-interest banks. The apex bank increased the new minimum capital for commercial banks with international affiliations, otherwise known as mega banks, to N500 billion; commercial banks with national authorisation, N200 billion and commercial banks with regional license, N50 billion. Others included merchant banks, N50 billion; non-interest banks with national license, N20 billion and non-interest banks with regional license will now have N10 billion minimum capital. The 24-month timeline for compliance ends on March 31, 2026. Under the guidelines for the recapitalisation exercise, banks are expected to subject their new equity funds to capital verification before the clearance of the allotment proposal and release of the funds to the bank for onwards completion of the offer process and addition of the new capital to its capital base. The CBN is the final signatory in a tripartite capital verification committee that included the Securities and Exchange Commission (SEC) and the Nigeria Deposit Insurance Corporation (NDIC). The committee is saddled with scrutinising new funds being raised by banks under the ongoing banking sector recapitalisation exercise.
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