Everest Amaefule, Ifeanyi Onuba and Okechukwu Nnodim


In the over five years that President Goodluck Jonathan has been presiding over the affairs of the country, the Federal Government has borrowed N5.04tn from the domestic debt market.

Jonathan became Nigeria’s acting President on February 10, 2010 and substantive President on May 6,2010 following the death of President Umaru Yar’Adua on May 5,2010. On May 29, 2011, he was sworn in as an elected president.President-Goodluck-Jonathan

Records at the Debt Management Office showed that the domestic debt of the Federal Government stood at N3,466,360,000,000 (N3.47tn) as of March 31, 2010.

The latest debt statistics from the DMO as of March 31, 2015 showed that the domestic debt had risen to N8,507,545,474,000 (N8.51tn).

This means that in the last five years, the Federal Government had borrowed N5.04tn from domestic lenders. It also means that within the period, the domestic debt of the Federal Government grew by 157.48 per cent.

A breakdown of the domestic debt profile of the Federal Government by instruments showed that FG Bonds accounted for N5.37tn or 63.13 per cent of the total domestic debt.

The Nigerian Treasury Bills, on the other hand, accounted for N2.87tn or 33.68 per cent of the Federal Government total domestic debt profile.

Similarly, the Nigerian Treasury Bonds accounts for N271.22m or 3.19 per cent of the Federal Government’s total domestic debt profile.

The DMO statistics also showed that the domestic debts of the states grew by 116.83 per cent within the same period.

As of March 31, 2015, the domestic debts of the states stood at N1.69tn or $10.87bn. However, as of March 31, 2010, the domestic debts of the states which were only given in dollars stood at $5.01bn.

This means that in dollar terms, the domestic debts of the states rose by $5.85bn or 116.83 per cent in the last five years.

Within the same period, the external debts of both the federal and state governments rose from $4,306,180,000 ($4.31bn) to $9,464,110,000 ($9.46bn).

This means that within the five-year period, the external debts of both tiers of government rose by $5,157,930,000 ($5.16bn). In percentage terms, the external debts of both tiers of government rose by 119.78 per cent.

The latest debt figures released by the DMO did not segregate the external debts of the country into the proportions owed by the Federal Government and the various states of the federation.

As of December 31, 2014 when the debt figures were last segregated, the states’ component of the nation’s external debt profile stood at 33.63 per cent while the Federal Government’s component stood at 66.37 per cent.

With $1,169,712,848.66, Lagos State occupied the top position on the list of the most externally indebted states.

It was followed by Kaduna, $234,416,052.15; Cross River State, $131,469,661.94; Edo State, $123,128,295.53; and Ogun State, $109,154,553.08.

The least exposed states in terms of external debts were Taraba, $22,780,063.89; Borno, $23,067,549.16; Delta, $24,233,639.67; Plateau, $30,947,579.75; and Yobe, $31,237,619.25.

The increasing profile of the nation’s domestic debt has been reflecting on the cost of debt servicing.

According to budgetary provisions, the cost of debt servicing went up from N591.76bn in 2013 to N712bn in 2014. This was made up of N663.61bn for servicing domestic debt and N48.39bn for the foreign debt component.

A statement by the DMO last week said the debts of the country, especially those owed by the Federal Government, had not grown unusually in the last four years. It also explained that the debts had been rising because of budget deficit financing.

According to the office, the increase in public debt between 2011 and 2014 was the lowest compared to the period 2004–2007 and 2008–2011.

The DMO said, “In 2010, there was a general wage increase (53.7 per cent average increase) for all categories of public servants, including political appointees. The funding of this depended on increased domestic borrowing.

“The global economic and financial crisis (2008-2010) occurred within the same period. All economies engaged in counter-cyclical public spending, using what was popularly referred to as stimulus package.

“In Nigeria, the government was able to effectively play the role by borrowing from a domestic bond market, which to the country’s credit, had been developed as an alternative source of funding after the exit from the Paris and London Clubs debts in 2005 to 2006.

“While the Federal Government’s debt stock has grown, a comparison with the figures before the exit from the Paris Club should not be on absolute figures alone. The size of the GDP and the structure of the debt must be taken into consideration.

“The increase in the domestic debt was due principally to the financing of the deficits as appropriate in the annual budgets. The budgets include both capital and recurrent expenditure; thus, the deficit cannot be attributed to a single item on the budget.

“In the case of external borrowings, which are mostly from the multilateral financial institutions; the utilisation of the proceeds are tied to projects – in power, agriculture, health, education – and other infrastructure and human development projects.”

The Debt Office added that public borrowings were done in accordance with the mandate of the National Assembly.

Finance experts, who spoke to our correspondents, on the issue, called on the DMO to ensure that it did not go beyond the acceptable limit of debt to Gross Domestic Product Ratio

An Associate Professor of Finance, Nasarawa State University, Keffi, Uche Uwaleke, said that the increase in the debt could also be looked at from the standpoint that the economy was growing.

He said, “One important point you should realise is if the debt is sustainable. If it is sustainable relative to the size of economy, then it should not call for concern. As long as we are operating within the acceptable threshold of debt to GDP ratio, then it shouldn’t be of much concern.

“But that doesn’t mean we should continue to borrow, the DMO should do all within its powers to manage the debt stock within a sustainable level.

“Again, the worrying aspect of it is the fact that in the past for instance, we borrowed money to finance consumption. We borrowed money to meet the demand for increase in wages and salaries and we have not recovered from that up till now because if you check the 2015 budget, the provision that has been made for debt servicing is as a result of the impact of that borrowing area.”

Also, Bismarck Rewane, who is the Chief Executive, Financial Derivatives Company, who described the debt as huge, said that Nigeria was spending about 25 per cent of its revenue on debt servicing.

He said, “The debt servicing burden is quite high. The debt has to be restructured because what we are seeing now is that the debt-to-GDP is high. We are spending almost 25 per cent of our revenue to service debt and that is why I say it is quite high, and again we have another large percentage that is spent on subsidy. When you consider all these, you will find out that there will be nothing left to run the economy.”

A former President, Association of National Accountants of Nigeria, Samuel Nzekwe, said the country’s debt would slow down the development of capital projects across the country.

The Chairman, Institute of Chartered Accountants of Nigeria, Abuja District, Mr. Adewale Gbakinro, said it was wrong for the Federal Government to borrow as much as N5tn in the last five years when oil sold for more than $100 per barrel for most of the period under review.

Gbakinro said, “Much of the borrowings were spent on recurrent expenses. It does not make sense to me to borrow to pay salaries.

“The amount of money being spent in Nigeria to run government is not right. I know that democracy is costly but a lot could have been done through financial discipline.”

Gbakinro listed the budget for feeding at the Presidential Villa and the maintenance of the presidential fleet as some areas that government could have cut down on the cost of governance.

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