VenturesNow

IMF applauds Nigeria’s non-request for debt relief, but concerns over debt servicing cost remains

Published

10 months ago

January 28, 2024

High debt servicing costs continue to be an increasing concern, according to the International Monetary Fund (IMF), despite the fact that Nigeria and other low-income debtors have not yet requested any debt relief.

According to the IMF, since Ghana’s request more than a year ago, there has not been a significant request for comprehensive debt relief from a low-income nation.

The IMF praised Nigeria and three other nations for recent improvements to their subsidy policies, which would free up funds for development expenditures and increase revenue.

It said, “Building resilience in the face of these trends requires countries to act. Some countries have made progress—for instance, Angola, The Gambia, Nigeria, and Zambia have taken steps to implement significant energy subsidy reforms to create space for development spending.”

It nevertheless chose to voice concern that many nations were falling behind, particularly when it came to initiatives aimed at boosting income, such as expanding the tax base, cutting tax breaks, and improving the effectiveness of tax administration.

For example, in 2022, the average revenue share of sub-Saharan African nations was just 13% of GDP, while other rising and developing economies generated 18% and advanced economies 27% of GDP.

“And those with high debt vulnerabilities can’t afford to wait. Policy reforms are needed to boost growth and capture more revenue from that growth, for instance, through tax reforms. This will directly improve countries’ key debt metrics and ensure they can avoid a costly debt crisis,” the report read further.

As of June 2023, Nigeria’s public debt was estimated to be N113.4 trillion, including $43.2 billion in foreign debt and N54.1 trillion in domestic debt. However, given the naira’s depreciation and the president’s desire for further borrowing, it is anticipated to increase to approximately $51 billion.

VenturesNow

Food prices drive second straight monthly hike in Nigeria’s inflation

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

VenturesNow

MTN financial report reveals drop in group service revenue

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.