Amid $151.3 billion in public debt, here are Nigeria’s top creditors

In June 2022, Nigeria’s public debt stood in the billions of dollars and the majority of creditors were Nigerians.

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, compared to around $103.3 billion reported by the Debt Management Office ( BMD).

The difference is the CBN’s whopping 20 trillion naira ($48 billion) in ways and means loans to the government, which increased further to 22 trillion naira in September.

The DMO has yet to classify the amount as 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.

The news continues after this announcement

Federal and state governments owe a combination of domestic and foreign debt. Domestic debt is made up of FGN securities, treasury bills and, more recently, CBN ways and means. On the foreign scene, Nigeria owes countries (bilateral debts) and multilateral institutions like the World Bank, IMF and African Development Bank.

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

The news continues after this announcement

  • Bonds are also listed on the Nigerian Stock Exchange or FMDQ where traders can buy and sell the bond.
  • According to DMO data, Nigeria’s total domestic debt is approximately 26.3 trillion naira of which states owe 5.2 trillion naira.
  • Most debt is denominated in FGN bonds, government bonds, sukuks, treasury bills and green bonds.
  • More recently, the central bank of Nigeria announced a new 20 trillion naira in June 2022a debt on which the government relies heavily.

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

  • Nigeria’s external debt is owned by several countries and institutions and according to our records Eurobonds are the largest chunk with approximately $15.6 billion approximately 36% borrowing from the government’s external debt.
  • Multilateral institutions such as the World Bank and the IMF come next with about $13 billion and $3.2 billion respectively.
  • The AfDB, which Nigeria partly owns as one of its major shareholders, has lent Nigeria about $2.8 billion in loans.
  • Nigeria is also indebted to about five countries which owe them a total of $4.73 billion as of June 2022. China is the most indebted with about $3.95 billion, or about 83.5% of the total country.
  • This makes China the only lending country to Nigeria in the world.

Nigeria’s largest creditors: After analyzing all the data, what is clear is that Nigeria’s biggest creditors are Nigerians.

  • Government securities total around 26 trillion naira or $50.5 billion (assuming the official exchange rate), and this is due to pension funds, banks, mutual funds, corporations, schemes collection investment, etc. They are all represented by contributions made by Nigerians.
  • According to their June net asset value data, pension funds alone hold more than N9 trillion in FGN securities, treasury bills, Sukuk and agency bonds.
  • After the Nigerians, the second biggest creditor on the boos is the central bank with over N20 trillion in Ways and Means loans.

What does that mean: Nigeria’s total public debt of around N62.8 trillion represents around 33% of the country’s gross domestic product, which by international standards is well within range.

  • More importantly, Nigeria is heavily exposed to debts owed to Nigerians with approximately 73% of debts in local currency.
  • This effectively means that the Nigerian government has a better understanding and control over how it manages its domestic debts. It can, for example, in an unlikely situation where it is unable to repay local debts as they come due, print more naira to meet that obligation.
  • Only 27% of the total debt value is in foreign currencies totaling $40 billion. Most of the debts are also medium and long-term Eurobonds and are owed to various creditors.
  • Although this is a manageable figure, it is more than Nigeria’s external reserves and it becomes expensive to maintain.

Nigeria is not in any favorable position take on more external debt at current rates given the state of government revenues. However, to meet its large budget deficits, it is likely to continue to borrow from the central bank and issue more FGN securities which continue to expose Nigeria to its governments.

Previous Red Theory: Socialism and the Bourgeois Right
Next Banks fund Tenneco takeover after failed sale attempt | WSAU News/Talk 550AM 99.9FM