Nigeria’s Debt Burden Rises As Ministry Of Solid Minerals Development  Injects US$5 Million  Into The Economy

By Elizabeth Chukwuma

It is not yet Eldorado for the Nigerian economy as President Bola Ahmed Tnubu, appears to have followed the footsteps of former President Muhammadu Buhari, who sold Nigeria in the International Finance  market, to resort to domestic and foreign borrowing to run the affairs of the government, thus increasing the nation’s debt burden.

Olayemi Michael Cardoso, a former Commissioner for Economic and Budget,  during Tinubu’s Administration a governor of Lagos state and now governor of Central Bank of Nigeria, CBN, who have been managing the country’s debt by servicing the creditor nations , London and Paris Club and other Multilateral Financial institutions may no  longer finding it funny. This is because of the pressure from the foreign creditors who are following the Nigerian Government bumper to bumper to ensure that they will not default in the debt repayment plan.

US Dollar

 At present the country’s foreign debt which is put at about the North American country of the United States, US,  $51 billion  is till going up  as the current Tinubu’s Administration was said to have continued to borrow. This is evident with the borrowing of an additional N8 billion and €100 million, as part of the 2022-204, borrowing plan of the government.

The DMO , had reported  that as at June 2022, barely one month after  former President Buhari left office,   the country’s  foreign debt  burden which  was US$43.2 billion  while the domestic  debt was  N54.1 trillion.  But  the country’s cumulative debt , both foreign and local, according to CBN, sources  had hitthe N130 trillion mark and still going up.

Much of the foreign debts was aid to have been owed the African Development Bank, AfDB, under the close watch of Akinwumi Adesina, a former minister of Agriculture and Rural Development during Goodluck Jonathan’s Adminstration and the World Bank Group, which includes the International Monetary Funds, IMF,   and its associated interests with the sum of US$1 billion and US$2 billion respectively.

There are indications that   this 2024, fiscal year, the Nigerian government has planned to borrow N8.2 trillion, N10 trillion in 2025 and N11 trillion in 2026, to run the government, thus returning the country to the Buhari era. At present the Nigerian government had secured US$4.95 billion from the World Bank Group over the rising external debts servicing costs of the country.

The World Bank was said to have   disbursed a total of  US$4.5 million  to the National Identy  Management Commission  ,IMC, under  the digital  Identification  for Development,  project. The CBN had said that Nigerian was able to secure the funding with the passoing into Law of the Nigeria Protection Act  in June 20233The Value News online Magazine was informed that that the release  of the funds for the multi-million dolaar project  comprises a combination  of ‘’loans, grants.   Predicated on the institutionalization  of data protection

The apex bank had confirmed that the fund was disbursed in multiple tranches between December 2021 and April 2024 with the disbursement of US$107.3 million and the disbursement is still ongoing.  The project total cost of the entire project   is put at US$430 million.

Cardoso: CBN Governor

In apparent reaction to Nigerians’ worries about  the stark decline  of the nation’s foreign reserves  from US$34.45  billion in March 18, 2024 to US$32.29 billion   as at April  15, 2024,  showing a drop  of  US$2.16 billion  in 29 days , may have forced  Cardoso, the CBN,  governor  , to speak out  at the ongoing  IMF Spring meeting  held  in Washington DC,  Capital of the US, on Wednesday, June 19, 2024.

The argument in both official and unofficial circles was that the country’s foreign reserves was used by the Federal Government to stabilize the naira in the Autonomous Foreign Exchange Market, AFEM.  The CBN, governor who could not take it had aid that ‘’the nation’s foreign reserves was used to settle debts owed  international Creditors like the Mlti-lateral Financial Institutions: World Bank Group and IMF,  AfDB, London and Paris Club  and other obligations to the expenditure on the   ordinary course of business as seen in other parts of the world.

He may have shocked Nigerians when he revealed in the latest monthly report of the bank that the Nigerian Government spent a total of US $15.55 billion on foreign debt servicing between 2019 and 2014, an interval of five years.  He had said that in 2019, the government of the then President Buhari had spent  US $588.33 million  in debt servicing  between January and May while  the payment for 2020 was US$5.40 billion.  The CBN governor who had continued his exposure had further revealed that in 2021, the amount paid the Creditors by the Buhari’s Administration was US$2.02 bn, US$2.34 bn in 2022 and US$3.43bn in 2023. Between January and May 2024, the Tinubu’s government, according to the governor has paid US %2.18bn in debt servicing.

He was said to have made clear to participant at the IMF Spring meeting in US, that ‘’there were no intentions by the Tinubu’s Administration to defend the naira with the country’s external reserves, describing it as counterproductive.   

The Nigerian  apaex bank governor  who could not hide his feelings at the IMF Spring Meeting  had said that   the nation’s foreign reserves  decline  marks  remains the lowest  in six years, describing ‘’it as a decisive end  to the period  of steady accrual, during which the reserves  witnessed  a 3 –day surge , accruing  US$1.28 billion  between February5, 2024, and March 18, 2024’’.

Dele Alake: minister of solid minerals Development

While the Nigerian Government is spending so much of the country’s oil revenues to service its domestic and external debt, Dele Alake, minister of Solid Mineral Development   says the solid mineral Development ministry’’ National Gold Purchase Programme’’ will go a long way to increase the nation’s foreign reserve and boost the naira’s value in the foreign exchange market.

The minister who had said that the  first transaction of  the refined gold  which was made to  meet  the London  Bullion  Market Association  Good Delivery Standard  has delivered a US $5 million  increase  in Nigeria’s foreign reserve assets ,.   70+Kg of gold refined to the London Bullion Market Good Delivery \Standard and successful aggregation of locally mined gold   thereby injecting about N6 billion into the Zamfara state rural economy and other parts of Nigeria where there are huge gold deposits in Commercial quantities.

Informed sources had  told the Value News that   only gold and silver bars that meet  the ministry ‘s Solid Minerals   Development Fund,   Good Delivery standards  are acceptable  in the settlement of  a loco  London contract , where  the bullion  traded  is physically  held in London.

An elated President Tinubu, had commended officials of the  ministry of Solid Minerals ministry   for achieving the milestone  effectiveness  of successful completion  of the first transaction   of the National Gold  Purchae  Programme which aligns  with the Administration’s drive  to diversify the economy.

 Hajia Fatimah Shinkafi,  Executive Secretary of the Solid Minerals Trust Funds had told those that  cares to listen that  the London  Bullion Market  Good Delivery Standard  is the only  globally  recognized  stringent  and trusted  standard  that enables  the global trade  on gold and silver bars.

She was emphatic that the National Gold Purchase Programme would go a long way ‘’ to enhance the country’s fiscal  and monetary stability ‘’.

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