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Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% - Politics - Nairaland

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Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by Ademola47(m): 9:46am On May 16
Nigeria spends 86% of revenue on debt servicing, South Africa pays 20%

…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.

The Chief Executive Officer of Centre for the Promotion of Private Enterprise, CPPE, Dr Muda Yusuf, said that debt service ratio was a function of the magnitude of the debt and its cost.

“If the amount you are borrowing is high, you also have to pay more. Also, Nigeria borrows at expensive rates, especially the Eurobonds. Sometimes, we celebrate that our Eurobondsare oversubscribed, but the yields are very high when you compare them with other countries,” Yusuf said.

He explained that investors perceived Nigeria as high-risk, explaining that risk premium must be paid when bonds were perceived 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.

Findings have shown that Egypt’s debt service-to-revenue was 20.5 per cent in 2021, according to its central bank, while Kenya’s and Uganda’s were estimated at 60 per cent and 27-30 per cent respectively.

Another major reason for Nigeria’s high debt service-to-revenue is its low revenue generation. Analysts are worried that Nigeria is not raising enough revenue from an economic size of over $400 billion, wondering why policy makers are not thinking out of the box.

Nigeria’s revenue to GDP is nine per cent, while Ghana’s is 13 per cent. Nigeria is seven times Ghana’s population of 31 million.

According to the DMO, Kenya and Angola have a revenue-to-GDP ratios of 16.6 per cent, and 20.9 per cent respectively.

“We are likely to have a higher debt service-to-revenue ratio if revenue levels do not increase significantly,” said President of Lagos Chamber of Commerce and Industry, Michael Olawale-Cole, at a press conference in April.

Cole suggested that the Federal Government must improve its tax collection by expanding the tax net to reduce dependence on oil revenues and exposure to global shocks like the war in Ukraine.

A PricewaterhouseCoopers’ research has suggested that Nigeria must convert its dead assets into liquid ones.

Partner & Chief Economist, PwC Nigeria, Andrew S. Nevin, recently explained that Nigeria had $900 billion worth of dead assets in residential, real estate and agricultural land that must be revivified and converted into liquid assets.

The Director-General of Lagos Chamber of Commerce and Industry, Chinyere Almona, in a recent statement, said Nigeria must identify corporate, physical, intangible, human assets, determine their worth, and make plans to repurpose or redevelop idle ones.

Almona stressed the need to break government monopoly in the infrastructure sector (railway, pipelines, power transmission) in order to attract investors to commit equity funds into them.

https://punchng.com/nigeria-spends-86-of-revenue-on-debt-servicing-south-africa-pays-20/

6 Likes 1 Share

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by Mynd44: 9:49am On May 16
TundeDes:
How did we get there
It is simply because the South African Government earns more in terms of taxes and royalties than the Nigerian government

10 Likes 2 Shares

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by salbis(m): 9:50am On May 16
The chopping wey dey dis country is too much. From top to bottom all dey steal like rats.

19 Likes 2 Shares

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by ObosiLandlord(m): 9:50am On May 16
Even though SA earn more than Nigeria, GMB didn't borrow with sense.

I would have been more happy if he borrowed to fix power supply

Power supply is still very terrible even though e don almost spend 7 years in power.

When you tell some people Nigeria is not a wealthy Nation, dem go dey follow you argue. Buhari North bring so little to the table, yet he don finish us with the way he has been borrowing.

73 Likes 3 Shares

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by salbis(m): 9:51am On May 16
Mynd44:

It is simply because the South African Government earns more in terms of taxes and royalties than the Nigerian government
or better still our leaders are higher thieves than their SA counterparts.

40 Likes 2 Shares

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by KillerCrocodile: 9:51am On May 16
And the Money they Borrowed, ends up in the pockets of few people.

Now the General Public will bear the Brunt.

10 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by steveneche(m): 9:51am On May 16
tongue
Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by Faller: 9:51am On May 16
I'm not surprised, when we have Almajiri in power

2 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by mike8804: 9:51am On May 16
Mynd44:

It is simply because the South African Government earns more in terms of taxes and royalties than the Nigerian government
na English u dey talk, incompetence is incompetence no way around it.

54 Likes 2 Shares

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by Amuluonyenaego: 9:51am On May 16
Ndi oshi

5 Likes 1 Share

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by JosephXavier: 9:51am On May 16
Thanks to Buhari, we will soon be spending 90% on debt servicing while the politicians will embezzle 8%

9 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by xeratek: 9:52am On May 16
Mynd44:

It is simply because the South African Government earns more in terms of taxes and royalties than the Nigerian government
wiredbanker cool

6 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by goaldynman(m): 9:52am On May 16
This is why Nigeria urgently needs someone like Peter Obi (at this point in time) to steer the ship of Nigeria back to the right path.

If you vote Thief.nubu the undertaker he will just bury the country within 3years!

And if you vote Athiefku the glutton, he will just sell off the country within 2years!!

31 Likes 2 Shares

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by SegunBABA007(m): 9:53am On May 16

5 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by Ezedon(m): 9:53am On May 16
Corruption

1 Like

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by LandMann: 9:53am On May 16
Still dey are lining up to support Tinubu so they can loot recklessly while he globetrottes to go attend to his health after winning.

Maybe they want Nigeria to use 98% of revenue for debt servicing before Tinubu's 8 years is over

8 Likes 1 Share

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by gracealonev: 9:53am On May 16
That's the answer when you multiply Change by Next Level!

2 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by pmc01(m): 9:53am On May 16
The abracadabra continues.


To be honest, this country is a paradox

2 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by Whois(m): 9:54am On May 16
Lazy/politicians ass licking youths stand with buhari

Cc MANNABBQGRILLS
NLpolicewoman
ilovedemmanna

3 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by Winters23: 9:54am On May 16
Ewoooo
Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by wiseone28: 9:54am On May 16
The country is on a free ride

1 Like

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by AfonjaNaBastard(f): 9:54am On May 16
Failed government.

1 Like

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by DropsMic(m): 9:54am On May 16
Hmm
Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by seanWetchen: 9:54am On May 16
Mynd44:

It is simply because the South African Government earns more in terms of taxes and royalties than the Nigerian government

So Nigeria Government don't earn more in taxes and royalties?

Clowns!!!

16 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by Bigchristo: 9:56am On May 16
Mynd44:

It is simply because the South African Government earns more in terms of taxes and royalties than the Nigerian government
You lied, the Nigeria government borrow money more than the South Africa our debts is bigger than theirs

10 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by fastseo: 9:56am On May 16
Mynd44:

It is simply because the South African Government earns more in terms of taxes and royalties than the Nigerian government
Bad leadership, presidency not fit or sound economically hence the product of their policy making.
You can even see the results on our exchange rate... A dollar now 600 naira from 240 when he came on board

Buhari should not have come back the second term.

8 Likes 1 Share

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by irunoko(m): 9:57am On May 16
ObosiLandlord:
Even though SA earn more than Nigeria, GMB didn't borrow with sense.

I would have been more happy if he borrowed to fix power supply

Power supply is still very terrible even though e don almost spend 7 years in power.

When you tell some people Nigeria is not a wealthy Nation, dem go dey follow you argue. Buhari North bring so little to the table, yet he don finish us with the way he has been borrowing.
this Naija matter has defied all Logical explanations.i don't even know what to say.e be like village people don take over Nigeria

2 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by treesun: 9:57am On May 16
Ademola47:


https://punchng.com/nigeria-spends-86-of-revenue-on-debt-servicing-south-africa-pays-20/
Nigeria has more potential than South Africa, but investors are running away due to bad policies with alacrity!

2 Likes

Re: Nigeria Spends 86% Of Revenue On Debt Servicing, South Africa Pays 20% by Emmastan291: 9:58am On May 16
Nigeria’s total debt as at December 2021 was $94.166bn

The Next President will inherit the total debt.


Yet, We rarely see the impact of these loans yet, The FG will tax the common man to repay the debts.

4 Likes

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