Dear Subscriber,

No time for bad decisions!

The popular author Matt Fox said, “Poor decision-making will almost always lead to less than desirable outcomes.”

In twelve days, a new administration takes on the weighty and burdened Nigeria—tepid growth (3%), ballooning inflation (22.04%), and elevated debt level (₦70 trillion). To bring in desirable economic outcomes, they must first break free from past mistakes, choose the best armour bearers and commit to making the tough but necessary decisions (reforms) to defibrillate the economy. It will be hard, especially with the trust deficit of Nigerians and the international community. But there could be light at the end of the tunnel if only we start the journey. It might hopeful thinking, but then again, aren’t we all clinging to hope?

Playing with mirrors: Are we free from debt’s wrecking ball?

No! it’s only a bookkeeping exercise that took place when the National Assembly approved the transformation of Ways & Means advances (₦22 trillion) to a 40-year bond at a 9% interest rate.

In truth, this was nothing but a home-grown definition of securitization, looking more like warehousing than an orthodox financing model. This is because the instrument lies in the balance sheet of the CBN and is not for sale to the public, which is the way typical securitization processes work (sell your debt, buy time to generate revenue, and when it’s time, pay the debt).

Still, the FG’s public debt is “matter”—it has weight (now ₦70 trillion: 31% of GDP) and occupies space in the minds of investors, business owners, analysts and the common man, who all wonder how this debt will reduce amid the revenue shortfall. As Lincoln once said, “You can fool all people some of the time and some people all the time. But you can never fool all people all the time”.

In this edition of the FDC Monthly Bulletin, the FDC Think Tank unpacks these issues and more, providing their economic implications.

Enjoy your read!