LCCI: Nigeria’s debt-service-to-revenue peaks at 98%

By Okwy Iroegbu-Chikezie

THE Director-General, Lagos Chamber of Commerce & Industry (LCCI), Dr. Chinyere Almona has lamented the country’s huge debt situation consuming a significant share of the revenue.

Quoting the budget implementation report, she said the debt service-to-revenue ratio for between January and May, this year stood at about 98 per cent up from 83 per cent recorded last year.

She regretted that government has resorted to debt to finance recurrent and capital obligations in the face of dwindling revenue.

Almona said though Nigeria is an asset-rich nation owning hundreds of large state-owned companies, valuable parcels of land, and built structures in prime commercial locations. However, she regretted that unfortunately these assets are grossly underutilised and contribute too little to the country’s fiscal and financial situation because their market values are not known.

She said: “There is, therefore, a need for government to take urgent steps to establish the market values of the assets, securitise the corporate assets and commercialise the real estate assets to raise revenue for the government and foreign exchange inflows for the country.  There is a need to replace existing debt stocks with asset-linked debt to ease the debt servicing burden; attract greenfield FDI into publiclylisted state-owned companies; generate new revenue streams from commercialised real estate portfolios.’’

She asked the government at both federal and state levels to identify public assets and usage in a national asset register.  She identified four types of assets, namely; corporate assets – such as refineries, state-owned enterprises, physical   assets such as government land and built structures, intangible assets – such as the GSM licensing and pension funds and human capital with a national pool of high-return skills.

The LCCI chief rooted for a situation where the worth of the assets could be determined and corporate assets securitised via public share issuance to raise equities.

“A typical example is Saudi Aramco’s IPO of 2019 were $25.6 billion was raised after the oil firm sold a 1.5 per cent stake to private investors, thereby establishing the value of Aramco to be over $2 trillion. Physical assets such as idle or under-utilised properties could be repurposed and redeveloped for commercialisation to generate revenue.’’