Nigeria has a revenue problem not a debt crisis
Every country in the world has a national debt. The country with the highest debt in the world is the United States (approx. $23 trillion). Therefore, borrowing is not the problem but how the debt proceeds are used. That is why debt sustainability ratios are measured to evaluate the absorptive capacity of a country to utilize debt optimally. Nigeria’s Finance Minister is right in saying that Nigeria does not have a debt crisis however, its debt service as a percentage of its revenue and exports is the problem (N2.45 trillion, 23.7% of the budget).
You win some, you lose some
Nigeria improved 15 places to 131st in the World Bank ease of doing business report, consumer confidence also improved by 2.3 points to 3.8 points in Q3. On the other hand, 16 out of 26 companies that released their result reported a decline in earnings, the earnings of most banks is also expected to be weighed down by the implementation of the mandatory loan to deposit ratio. However, the implementation of the new minimum wage before Q1’2020 is expected to boost disposable income and increase demand
In this edition of the FDC bi-monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and the economy at large.
Enjoy your read!