General News
AfDB Worries over Nigeria’s $67.7Bn Debt
African Development Bank (AfDB), has released its African Economic Outlook 2015, and cautioned against Nigeria’s rising public debt profile which it put at $67.7 billion as at December 2014.
AfDB’s figure is higher than the All Progressives Congress (APC) and Prof. Yemi Osinbajo, Vice President-elect recent estimate of $63 billion.
The AfDB said total public debt level, which represents a five per cent increase from end-2013, was driven largely by the 10 per cent rise in the domestic debts of the federal and state governments.
The rising domestic debt emanated from the challenging fiscal position resulting from dwindling oil revenues coupled with need to implement several reform initiatives at both national and sub-national levels of government.
The report, written by Barbara Barungi (Lead Economist) and Eric Ogunleye (macroeconomist consultant), both of the group’s Nigeria Country Office, warned that an unchecked rise in public debt, especially domestic debt, could have negative effects on the economy.
“Increased domestic public debt has a tendency to raise interest rates, resulting in crowding out of the private sector from the local credit market. Anecdotal evidence suggests that increased public domestic debt is the major driver of the high lending rate in the country coupled with high monetary policy rate. Federal Government bonds and Nigerian treasury bills are the dominant instruments in the country’s domestic debt, accounting for over 95 percent of total domestic debt stock”, the report noted.
Despite the rising trend in public debt, the report, however, said the solvency and liquidity indicators show that the country remains at a low risk of debt distress, given a low debt-to-GDP ratio of about 12.5 per cent with external debt as low as 1.7 percent of GDP and mostly through international financial institutions’ concessional windows.
“A few risks persist, however, that tend to make the outlook and prospects of the Nigerian debt profile somewhat worrisome. One of these is the rising trend in sub-national debt. Failure to check this may undermine the effectiveness of the debt-management strategy being pursued. It is hoped that efforts of the DMO to reconstruct the debt at the sub-national levels and establish debt-management departments in each state will improve the situation. It is hoped that the robust debt management framework of the DMO will guide borrowing and the mode of financing any actual increased spending. However, a strong political will to stay the course of public financial management reform and the implementation of a genuine debt-management strategy are critical for success,” it added.
However, the AfDB report said the nation’s economy has enjoyed sustained economic growth for a decade, with annual real GDP increasing by around seven percent; from 6.3 percent in 2014. The non-oil sector has been the main driver of growth, with services contributing about 57 percent, while manufacturing and agriculture, respectively contributed about nine per cent and 21 per cent.
The economy is thus diversifying and is becoming more services-oriented, in particular through retail and wholesale trade, real estate, information and communication.
The 2015 outlook projected a moderate growth of five percent, due to vulnerability to slow global economic recovery, oil-price volatility and global financial developments. The low oil price, it said, would lead to a sharp decline in fiscal revenues, but that the overall impact on non-oil sector GDP would be relatively muted.
“The sector is, thus, expected to remain the main driver of growth over the medium term and, in the light of the recent macroeconomic challenges, the government has adopted an adjustment strategy that hinges on tightening government spending and shoring up non-oil revenues to compensate for dwindling oil revenues.”
The analysts called on government to address security issues facing the country, especially insurgency in the northeast and other parts of the country which they said has negative implications for investment.
“Insurgency also may hamper the fight against poverty as well as increase crime. An increased number of both internally displaced persons and refugees in neighbouring Cameroon and Niger have created a grave humanitarian situation. However, the current regional coalition force against Boko Haram appears to be making headway in subduing the insurgency.
They added that overcoming geographical and socio-economic barriers is central to achieving inclusive growth and sustainable development, while addressing rural-urban differences to ensure more balanced development through job creation and societal transformation will be critical for Nigeria’s future.
“This will need to be done within all the six geopolitical zones, in addition to addressing inequalities across these zones. Though there have been several policy initiatives aimed at territorial development in Nigeria, limited success has been achieved in addressing the fundamental causes of unevenness. The problem often lies with a structure of governance that gives room for developmental policy implementation at the federal, state and local levels of governance but not at the regional level”.
Renewable energy firm Daystar Power Group has expanded its installed solar capacity across West Africa through a partnership with Nestlé, bringing total deployments to 6,884 kilowatt-peak (kWp), or nearly 7 megawatts (MW), in what the company describes as one of the largest commercial and industrial solar partnerships in the region.
Four manufacturing facilities across Nestlé sites in Côte d’Ivoire, Ghana and Senegal are now operational, with installations located in Abidjan, Tema and Dakar.
Daystar Power has installed 3,447 kWp across two sites in Abidjan, Côte d’Ivoire. In Ghana, a 2,547 kWp system powers Nestlé’s Tema factory, while in Senegal an 890 kWp installation operates at the Dakar facility.
The company said each system is designed to deliver measurable environmental impact, including reduced greenhouse gas emissions and improved energy resilience.
The installations are tailored to local operational and grid conditions to ensure reliable renewable energy supply while supporting Nestlé’s net-zero ambitions and its commitment to reducing greenhouse gas emissions.
“Nearly 7MW across four Nestlé facilities is a number we are proud of, but what it represents matters more than the figure itself. It means that one of the world’s most demanding manufacturers has tested our model, trusted it, and come back. Our job now is to keep earning that across every market where industry needs energy it can count on,” said Yischai Beinisch, CEO of Daystar Power Group.
Samer Chedid, CEO of Nestlé Central and West Africa Region, said: “This investment reflects our commitment to building a business that not only grows but does so responsibly.
“By advancing solar energy projects in Ghana, Côte d’Ivoire and Senegal, we are embedding sustainability into our growth, reinforcing our role as a force for good, creating long-term value for communities and ensuring that our footprint actively contributes to a cleaner, more resilient future.”
The National Credit Guarantee Company Limited (NCGC) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) have signed a Memorandum of Understanding (MoU) aimed at supporting access to finance for Micro, Small and Medium Enterprises (MSMEs) in Nigeria.
The agreement was signed at the NCGC headquarters in Abuja and outlines areas of cooperation between the two agencies, including financial literacy programmes, credit guarantee support, capacity building, and other initiatives targeted at small businesses.
Speaking at the signing ceremony, NCGC Managing Director and Chief Executive Officer, Dr. Bonaventure Okhaimo, said the partnership is intended to provide a framework for expanding financing opportunities available to MSMEs.
According to him, small and medium-sized enterprises play a significant role in economic activity and employment generation across the country.
Okhaimo said NCGC has facilitated ₦32.78 billion in credit and provided over ₦13.09 billion in guarantees through its partnerships with financial institutions. He added that 1,478 businesses and entrepreneurs have benefited from the financing interventions, with 1,682 jobs reportedly created or sustained.
Also speaking, SMEDAN Director-General, Charles Odii, said the collaboration would enable the agency to connect more small businesses with available financing opportunities, particularly Nano and Micro enterprises that often face challenges accessing credit.
The two organisations said the partnership would also involve stakeholder engagement and awareness campaigns to provide information on financing options and the use of credit guarantees in lending arrangements.
The agreement forms part of ongoing efforts by both agencies to support enterprise development and improve access to financial services for small businesses across the country.
Observers say access to finance remains one of the major constraints facing Nigerian MSMEs, making collaborations between public institutions an important aspect of broader economic development initiatives.
Elon Musk is no longer a trillionaire after a sharp global sell-off in technology stocks wiped an estimated $500bn (£379bn) from his personal fortune.
Elon Musk
The billionaire entrepreneur Elon Musk had recently become the first individual to reach the trillion-dollar milestone following a record-breaking listing surge for his rocket company SpaceX earlier this month.
However, shares in SpaceX have since fallen by around 30% from their peak, while Tesla was also caught in a broader technology market downturn on Tuesday, June 23.
His net worth now stands at $957.1bn, according to analysis by Bloomberg, while calculations by Forbes suggest his fortune previously peaked at $1.45tn last week.
The drop in Musk’s wealth over the past week exceeds the total fortune of Larry Page, whose estimated net worth stands at just under $297bn.
The decline comes amid two consecutive days of losses on Wall Street, with more than $89bn wiped from Tesla’s market value after its shares fell 5.8% on Tuesday. Chipmaker Nvidia also dropped 4.1% during the same session.
Traders have warned that further volatility may follow after memory-chip producer Micron Technology prepares to release its third-quarter results, amid concerns that artificial intelligence valuations may be overheating.
Investment bank Goldman Sachs cautioned that AI-linked stocks could be vulnerable if there are signs of slowing investment from major tech firms.
Ben McKeown, an investment manager at Dowgate Wealth, said Musk’s fortune remains highly exposed due to its concentration in two major holdings.
He said: “The old adage is, you concentrate to build wealth and diversify to keep it. Musk is the most extreme example of this.
Almost his entire net worth sits in Tesla and SpaceX, which have been extremely volatile, especially SpaceX as the shareholder base starts to be unlocked and becomes free to sell.”
Musk had briefly become the world’s first trillionaire on June 12 following the listing surge of SpaceX, which saw its shares jump as much as 67% in its first three days of trading after an IPO that valued the company at more than $1.8tn.
However, the stock later fell for three consecutive sessions, erasing around $928bn in market value from a peak of $2.9tn to just over $2tn, before a slight recovery.
The scale of his recent wealth decline is now considered the largest on record, surpassing his previous loss in 2022 when his fortune fell by an estimated $165bn amid a slump in Tesla shares.
Another billionaire affected by recent market turbulence is Larry Ellison, whose net worth peaked at around $400bn last September before falling to approximately $210bn following a major sell-off in Oracle shares.
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