When I write about national issues, do not think I am attacking governments or our leaders. I can tell you boldly that they do not see the articles that way. In short, many call me and ask for my opinions on many national issues. Early this year, I received an unsolicited “offer” to become a  Director General in a federal government agency. I thanked them but made it clear that it was not the right role for me!

The APC, PDP, LP, etc reach out, seeking my small insights. I admire those working and serving in governments – but we still have to hold them accountable. Ndubuisi Ekekwe has one policy: I belong to ALL parties but I choose none. What that means is this:  I do not go partisan and I try to be objective and balanced, just as what you expect from an academic person.

I have many invitations to the National Assembly from our senators and House members. The last time I went, some took selfies with me. So, do not be confused thinking I am writing against APC.  I want you to understand that APC runs the nation and it has to own the good and the bad. We need to make that point because unlike other parties, it is the one running the show. If PDP or LP or Accord wins, they take the heat.

I write this to help those fixated on “attacks”. Nothing like that. The government invited me last time to attend the Diaspora event in the main ballroom of Aso Rock. I attended and we all chatted with the Vice President, Senate President, etc. This is Nigeria and it belongs to ALL of us, not APC, PDP or LP.  We want a working nation and constructive criticism is appreciated even by the government.

(photo, the last time in the National Assembly. I met many of our leaders and shared how to move the nation forward)

Nigeria’s public debt, which has increased significantly over the past seven years, reaching a mammoth height of N61 trillion, is increasingly eclipsing the nation’s revenue generation.

According to the 2022 fiscal performance report released on Thursday, the cost of servicing debt surpassed the federal government’s retained revenue by N310 billion in the first four months of 2022, which means, the government borrowed to pay debt.

The report said debt servicing gulped N1.9 trillion in the first four months of the year, whereas the government generated a total of N1.6 trillion during that period.

Though the development sends a rattling signal, analysts say it was long expected considering that Nigeria has been borrowing mainly for consumption.

Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said in Abuja, while addressing the situation, that urgent action is needed to address revenue underperformance and expenditure efficiency at national and sub-national levels.

The report indicated that there is an alarming gap between revenue generated by the government and debt servicing, and it will require drastic measures to upset it.

“The aggregate expenditure for 2022 is estimated at N17.32 trillion, with a pro-rata spending target of N5.77 at end of April,” the report reads.

“The actual spending as of April 31st (sic) was N4.72 trillion. Of this amount, N1.94 trillion was for debt service, and N1.26 trillion was for personnel costs, including pensions.

“As at April, N773.63 billion has been spent on capital expenditure.

“As of April 2022, FGN’s retained revenue was only N1.63 trillion, 49 percent of the pro-rata target of N3.32 trillion.”

The report noted that the federal government’s performance, based on its N285.38 billion oil revenue for the referenced period, amounts only to 39%, although it generated a total of N632.56 billion, which amounts to 84%, from non-oil tax revenue.

“CIT and VAT collections were N298.83 billion and N102.97 billion, representing 99 percent and 98 percent of their respective targets,” the report added.

“Customs collections (made up of import duties, excise and fees, as well as federation account special levies) trailed target by N76.77 billion (25.42 percent).

“Other revenues amounted to N664.64 billion, of which independent revenue was N394.09 billion.”

Against this backdrop, there is growing concern that the revenue challenge will deteriorate at the end of the Q3, as oil revenue decreases further due to insufficient oil output and petroleum subsidy payments.

The federal government is yet to find a way to address the debt – revenue disparity as its previous attempts to remove the subsidy were fiercely resisted because of concern that it will compound the already bad economic situation of the people.

The government plans to borrow additional N4 trillion to fill the budget deficit emanating from subsidy payments.

The IMF predicted that it would happen in 2026 but their model is really off by years. Yes, Nigeria has entered a new chapter in its reckless economic shipwrecking: “Nigeria’s fiscal position worsened in the first four months of the year as the cost of repaying debt surpassed the government’s revenue in the first quarter of 2022.” Simply, we as a people work for servicing debts. 

The International Monetary Fund (IMF) has warned that debt servicing may gulp 100 percent of Nigeria’s revenue by 2026, if the government fails to implement adequate measures to improve revenue generation.

The IMF’s Resident Representative for Nigeria, Ari Aisen, disclosed this while presenting the Sub-Saharan Africa Regional Economic Outlook report on Monday, 30th May 2022 in Abuja.

According to him, based on a macro-fiscal stress test that was conducted on Nigeria, interest payments on debts may wipe up the country’s entire earnings in the next four years.

(IMF predicted a full year in 2026, this is a quarter and that means that IMF is technically correct since Nigeria can recover next quarter and have the revenue receipts exceeding debts servicing obligations.)

I do not know what to write other than to point out that Naira will experience more pressure. I had noted that N700/$ by Dec 2022 is a possibility if we do not try new ideas since whatever we are doing now is not working. This is not a political statement; this is a statement from a concerned  citizen.

Nigeria has a quagmire: crude oil price cannot go sideways – it can only move up or down. The problem for Nigeria is that when the price goes up, it makes more money in the international market but also spends more to subsidize petrol since it has to import the by-product. And when the price drops, Nigeria does not make as much money internationally, affecting many things. But since prices can only go up or down, NOT sideways, we are in a mess. Interestingly, we do not have a solution on how to fix that problem.

Nigeria’s fiscal position worsened in the first four months of the year as the cost of repaying debt surpassed the government’s revenue in the first quarter of 2022.

According to details of the 2022 fiscal performance report for January through April, Nigeria’s total revenue stood at N1.63 trillion while debt servicing stood at N1.94 trillion, showing a variance of over N300 billion.

Nigeria’s Minister of Finance, Budget and National Planning, Zainab Ahmed, on Thursday warned that urgent action is needed to address the nation’s revenue challenge and expenditure efficiency at both the national and sub-national levels.

The report showed that gross oil and gas federation revenue for the first four months of the year was projected at N3.12 trillion but as at April 30, only N1.23 trillion was realised, representing a mere 39% performance.

Get your PVC – 2023 is becoming exceedingly important for the future of Nigeria. 

Tekedia has more reports on this here.

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Comment: Subsidy is not the problem. Excess spending on Subsidy is the problem. The other issue is the lack of think thank group designing operations model for the country. The executive are there to execute, judiciary to interpret law, legislation for policy. Who is designing how they along with other apparatus in the country blends in? This is where the issue lies!

My Response: “The other issue is the lack of think thank group designing operations model for the country. ” – I actually think we have many think tanks. What we do not have is DO tanks.

Comment follow: ok sir, but a think thank will control, influence and enforce things at all levels.

My response: ” but a think thank will control, influence and enforce things at all levels.” – Only in America, Europe, etc. In Nigeria, who cares when universities can be on strikes for months. The biggest think tank in a nation is the university system. If you can shut it down for months, you get the idea that no one cares….

Debt Servicing Gulped N310bn More Than Revenue Generated by Nigeria in First Four Months of 2022