…analysts say Nigeria’s debt too expensive
Nigeria spent 86 per cent of its revenue on servicing debt in 2021, but South Africa spent only 20 per cent of its receipts on the same purpose, according to findings by The PUNCH.
According to the International Monetary Fund’s 2021 Article IV estimates, Africa’s most populous nation spent 85.5 per cent of its revenue on servicing the debt in 2021.
On the other hand, South Africa’s budget office, situated in the National Treasury, estimated its debt service-to-revenue in 2021 at 20 per cent, explaining that for every five rand raised by the government, only one rand was spent on servicing debt.
Nigeria’s total debt by end of December 2021 was only 30 per cent of South Africa’s debt, yet the former’s debt service appears too expensive, according to analysts.
Nigeria’s total debt as at December 2021 was $94.166bn, according to the Debt Management Office, but South Africa’s total debt at the same period was $261bn, according to the country’s National Treasury and Bloomberg.
Nigeria is the continent’s largest economy. Latest estimates by the National Bureau of Statistics put the nation’s economic size at $420bn. On the other hand, South Africa is second largest economy on the continent with an estimated size of $320bn.
Analysts say Nigeria’s debt service is very expensive because of the perception of investors of the country as high risk.
…A market analyst, Ike Ibeabuchi, suggested that Nigeria must pay more attention to cost-cutting measures such as reducing the earnings of the legislature, adding that the country should look at ways of tapping equity rather than debt.
