The World Bank’s new International Debt Report released yesterday showed that Nigeria and 173 other countries in the International Development Association (IDA) list will spend over $62 billion to service over $9 trillion combined debts this year. Nigeria, Ghana, Kenya, Cameroon, Guinea, among other IDA-eligible countries’ debt-service payments on long-term public and publicly guaranteed external debt expanded to current status from the $46.2 billion last year, reports Assistant Business Editor, COLLINS NWEZE

Many global economies are running into debts and debt service-related costs as they struggle to pull out of COVID-19 induced economic crises.

The World Bank’s new International Debt report  has shown that Nigeria and 173 other countries in the  International Development Association (IDA) list will spend over $62 billion in the service of over $9 trillion combined debts this year. The list include Ghana, Kenya, Cameroon, Guinea, among others.

Debt Management Office (DMO) data showed that Nigeria total debt stock stood at $103.3 billion (N42.8 trillion) as at June 30, 2022.

Nigeria will spend N6.31 trillion ($14.30 billion) on servicing its domestic and foreign debt next year.

Fitch Ratings, a global rating agency announced that Nigeria’s debt service costs will continue to rise in the short to medium term, but the country has enough dollar liquidity to service the debts in the next two years,

In a report, the agency said rising debt service cost will  hobble the Nigeria’s ability to use fiscal policy to support economic growth, Fitch’s sovereign ratings director, Jermaine Leonard, said.

The report released yesterday showed that at the end of 2021, IDA-eligible countries’ debt-service payments on long-term public and publicly guaranteed external debt totaled $46.2 billion-equivalent to 10.3 per cent  of their exports of goods and services and 1.8 per cent of their gross national income (GNI), according to the report. Those percentages were up significantly from 2010, when they stood at 3.2 per cent and 0.7 per cent respectively.

The report said that the poorest countries eligible to borrow from the World Bank’s IDA now spend over a 10th of their export revenues to service their long-term public and publicly guaranteed external debt-the highest proportion since 2000, shortly after the Heavily Indebted Poor Countries (HIPC) initiative was established.

It highlights rising debt-related risks for all developing economies-low- as well as middle-income economies.

At the end of 2021, the external debt of these economies totaled $9 trillion, more than double the amount a decade ago. During the same period, the total external debt of IDA countries, meanwhile, nearly tripled to $1 trillion. Rising interest rates and slowing global growth risk tipping a large number of countries into debt crises. About 60 per cent of the poorest countries are already at high risk of debt distress or already in distress.

In 2022, IDA countries’ debt-service payments on their public and publicly guaranteed debt are projected to rise by 35 percent to more than $62 billion, one of the highest annual increases of the past two decades. China is expected to account for 66% of the debt-service payments to be made by IDA countries on their official bilateral debt.

“The debt crisis facing developing countries has intensified,” said World Bank Group President David Malpass. “A comprehensive approach is needed to reduce debt, increase transparency, and facilitate swifter restructuring-so countries can focus on spending that supports growth and reduces poverty. Without it, many countries and their governments face a fiscal crisis and political instability, with millions of people falling into poverty.”

On the surface, debt indicators seem to have improved in 2021, the report shows. As economic growth resumed following the global recession in 2020, public and publicly guaranteed external debt as a share of GNI returned to pre-pandemic proportions. However, this was not the case for IDA countries, where the debt- to-GNI ratio remained above the pre-pandemic level at 25 per cent.

Moreover, the economic outlook has deteriorated considerably.

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In 2022, global growth is slowing sharply. Amid one of the most internationally synchronous episodes of monetary and fiscal policy tightening the world has seen in 50 years, the risk of a global recession next year has been rising. Currency depreciations have made matters worse for many developing countries whose debt is denominated in U.S. dollars. The 2021 debt-to-GNI improvement, as a result, is likely temporary.

Over the past decade, the composition of debt owed by IDA countries has changed significantly. The share of external debt owed to private creditors has increased sharply. At the end of 2021, low- and middle-income economies owed 61 per cent of their public and publicly guaranteed debt to private creditors-an increase of 15 percentage points from 2010. IDA-eligible countries owed 21 per cent of their external debt to private creditors by the end of last year, a 16-point increase from 2010.

Also, the share of debt owed to government creditors that don’t belong to the Paris Club (such as China, India, Saudi Arabia, United Arab Emirates, and others) has soared. At the end of 2021, China was the largest bilateral lender to IDA countries, accounting for 49 per cent of their bilateral debt stock-up from 18 per cent in 2010. These developments have made it much harder for countries facing debt distress to quickly restructure their debt.

The rising debt vulnerabilities underscore the urgent need to improve debt transparency and provide more complete debt information to strengthen countries’ ability to manage debt risks and use resources efficiently for sustainable development.

“Poor debt transparency is the reason so many countries sleepwalk into a debt crisis,” said Indermit Gill, Senior Vice President and Chief Economist of the World Bank Group. “Complete, transparent debt data improves debt management. It makes debt sustainability analyses more reliable. And it makes debt restructuring easier to implement, so that countries can return quickly to economic stability and growth. It is not in any creditor’s long-term interest to keep public debt hidden from the public.”

 

The new International Debt Report reflects an advance in debt transparency. It draws from the World Bank’s International Debt Statistics database-the most comprehensive source of comparable cross-country information on the external debt of low- and middle-income countries. It improves on the earlier International Debt Statistics reports by adding substantive analysis and expanding both the breadth and specificity of the data in it.

Over the past five years, the International Debt Statistics database has identified and added $631 billion of previously unreported loan commitments, and an additional $44 billion were identified in 2021. The total of these newly documented additional loan commitments over the past five years is equivalent to more than 17 per cent of the total outstanding public and publicly guaranteed debt stock in 2021.

 

After a decade of driving financial inclusion for individuals and small businesses in Nigeria, Renmoney Microfinance Bank has engaged with partners, investors, regulators and business leaders on their experience and outlook for investing in Africa.

Renmoney is a digital bank operating on  a microfinance banking licence in Nigeria. The company provides loans, savings, deposit and payment solutions to Nigerians. Renmoney is regulated by the Central Bank of Nigeria (CBN) and insured by the Nigeria Deposit Insurance Corporation (NDIC).

Speaking during the bank’s 10th anniversary in Lagos,  the Founder and Chairman, Stephen Jennings, reiterated the company’s long term focus on Africa and Nigeria.

The bank chief, who spoke on the theme: ‘Going Long on Africa’, said: “Through Rendeavour, Renmoney and my previous business, Renaissance Capital, we have been here for 15 years in a very big way. We are emerging market pioneers and we typically bring a level of commitment and staying power in terms of people, capital, tenacity, balance sheet and financing capabilities that is unique and that few foreign investors can match”.

The keynote speech was delivered by world renowned emerging markets economist, Charlie Robertson, who drew parallels between fertility rates, education investment and economic success over the long term.

During the panel discussion, Jennings and Robertson were joined by Gbenga Oyebode – Founder, Aluko & Oyebode, seasoned investor and board member across different industries.

Jennings stated that the company was excited about the next phase of market development in Nigeria. “In emerging markets the long-term winners are normally determined during more challenging times. And while it is challenging in Nigeria today, we simply believe that the entire world is ultimately on a very similar development path; the only difference is the timing.  So overall, Nigeria ticks a lot of boxes for us as we see in the future what we’ve seen before here – a burst of rapid growth,” he said.

Renmoney’s Executive Director, Apekhade Idogho, lauded the staff, investors, regulators, depositors and partners for their support over the years. He said Renmoney “will remain focused on delivering innovative, useful financial solutions for Nigerians”.

Autochek, the automotive technology company  has been recognised for making car ownership more accessible and affordable across Africa. The company  has been named the Mobility Finance Platform of the Year at the 2022 Nigerian Business Leadership Awards (NBLA).

Senior Vice President for West Africa at Autochek, Mayokun Fadeyibi,  said “we are excited to receive this award on behalf of the Autochek marketplace and Autochek Financing Services as recognition of the work we are doing to drive the penetration of automotive financing in Nigeria and across Africa.

“We believe there is a great opportunity to catalyse more prosperity in our automotive sector and we look forward to enabling more of these opportunities for consumers, vehicle manufacturers and other stakeholders in the sector.”

Launched in 2020, Autochek is driving the penetration of auto-financing across Africa, enabling more consumers and businesses across North, West and East Africa to access financing solutions to purchase their desired vehicles.

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In less than two years of operations, the company has worked with more than 70 financial institutions and more than 2,000 dealerships to process more than 80,000 car loan applications. Leveraging the vast reach of its online marketplace, the company originates auto loans powered by data analytics that makes it easier for financial institutions to offer credit to consumers.

The Nigerian Business Leadership Awards celebrates business leaders and visionary companies that deliver game changing products and services that impact lives and livelihoods across the country.

The Mobility Finance Platform of the Year award recognizes Autochek as the company with the most outstanding financing models that is democratizing access to automobile ownership and driving innovation in the automotive sector.

Since the first edition that took place in 2019, the NBLA Awards has established itself as the most prestigious and credible awards system for non-listed companies in the real sectors of the Nigerian economy. Each year, the awards recognize exceptional business leaders and visionary companies upping the game in their sectors through innovative products, excellent services, and forward-thinking executive thought leadership.

The Assets Under Management (AuM) of Afrinvest Income Portfolio in naira and dollar terms is worth over N35 billion, the company announced at the weekend.

The disclosure came during a press briefing announcing Afrinvest Asset Management short term rating of A3 and long-term rating of BBB from Global Credit Ratings (GCR) as well as A- rating by Agusto & Co.

The Chief Investment Officer, Afrinvest Asset Management, Robert Omotunde, said both rating agencies have looked into the company’s books and provided independent reports on its industry status.

According to him, Afrinvest Asset Management’s Nigeria International Debt Fund (NIDF) remains one of the oldest and top performing mutual funds in the market, “and has birthed many mutual funds in the market.”

“On a quarterly basis, we have hosted consistently over the last two, three years quarterly webinars that speak to investment strategy outlook for the next quarter. These are reports that typically will guide investors on what investment opportunities are available to them and what issue to take. One of such is coming up today, titled: The Investment Strategy Outlook 2023: Hard or Soft Landing,” he stated.

He said, “We have today Afrinvest Equity Fund, which is a mutual fund that tracks equity listed on the Nigerian Exchange. There is also Afrinvest Dollar Fund, launched at the middle of the pandemic in May 2020, and it delivers superior returns to investors.

“The Afrinvest Security Fund is the mutual fund that tracks money market in the investment; the Afrinvest Income Portfolio in Naira and Dollars with over N35 billion Assets Under Management, all regulated by the Securities and Exchange Commission.”

He said rating agencies’ assessments showed the competence of the company’s staff members, the commitment of the company to delivering superior returns on investment, quality weekly strategy report and insights on fixed income, commodity, currencies.

Also speaking, the Chief Business Officer, Optimus by Afrinvest, Ayodeji Ebo, said Optimus, its newly launched investment platform makes transactions accessible to everyone.

He said: “We have spoken about the different mutual funds. But in terms of having access to it, how do you monitor your portfolio? That is what we feel is lacking in the market, and that is what Optimus offers to investors.

“It makes both public and private listed mutual funds accessible for investors to buy and when you also want to redeem, it’s also seamless.”

The Managing Director, Afrinvest Securities, Adedoyin Allen, said the company helps clients to invest in equities and fixed income instruments like your Treasury Bills.

“So, the good rating of Afrinvest Asset Management will strengthen investor confidence in the company, and this will rub off positively on Afrinvest Securities and the other subsidiaries of Afrinvest. At Afrinvest, integrity, professionalism and innovation are our watchwords. These ratings are a testament to that,” she stated.

Quickteller Paypoint has reiterated its commitment to taking financial services closer to the grassroots to empower the people.

Speaking during the Double Up Promo facilitated buy the company, Marketing Manager, Quickteller Paypoint, Bunmilofe Akingbola, said that at the heart of Quickteller Paypoint  is the urge to deploy technological solutions to help drive the growth of financial inclusion in Nigeria and Africa at large.

As part of its effort towards rewarding agents loyalty, Quickteller Paypoint, Interswitch’s Financial Inclusion Services vehicle,  has rewarded over 1,000 agents  with exciting prizes from its ongoing promo.

“Our major focus at Quickteller Paypoint is to deepen  financial inclusion  by bringing financial services closer to Nigerians, especially those who are in financially excluded regions, and we are really excited about the capable partners we have found in our agents across the country.”

“Today, we are rewarding these reliable agents through our Double Up Promo, thereby  enhancing their lives. While we impact the lives of these agents, we are also enthusiastic about being able to reach more financially excluded Nigerians and touch more lives through avenues like this.”

He said the prize presentation ceremony was done to reward the effort and dedication  of its agents across the country towards  driving the goal of the consumer digital payments platform.

Winners who emerged from the draws  showed excitement and gratitude to  Quickteller Paypoint for recognizing their role in driving the growth of financial inclusion across the country and rewarding them for playing such a noble role. The winners also opined about the financial freedom they have enjoyed since becoming Quickteller Paypoint agents . They explained that it is very lucrative and the Quickteller Paypoint team is very supportive.

The promo which began in September has seen  participation from over 2,000 individuals/businesses within the Quickteller Paypoint agency network.  After a series of raffle draws monitored closely by relevant  regulatory bodies; Federal Competition and Consumer Protection Commission (FCCPC), the Lagos State Lottery Board (LSLB), and the National Lottery Regulatory Commission (NCLRC), more  winners have emerged from another raffle draw concluded recently.

Five of the winners; Bamidele Aminat, Ishaya Galion, Ayinla Habeeb of Achiever’s world, Edozie Joy, and Ilonwa Peter of Oxford Logistics, visited the Quickteller Paypoint premises to receive their prizes and celebrate their win.

Baobab Microfinance Bank Limited and Baobab Plus are bringing financial services closer to the people with easy access to credit for customers interested in purchasing consumer goods.

The bank, which offers credit access to customers interested in acquiring consumer goods like solar energy and now smart phones, said the move was to deepen financial inclusion across the country and make it easier for the consumers to buy products of their choice and pay in three months, six months among others.

The extension of the scheme to mobile devices follows the success of its solar energy credit programme achieved in different parts of the country, where it was introduced by the company.

The mobile phone offer took off concurrently at four branches of the bank with a plan to extend to other outlets nationwide in the coming months including the planned new branches to be opened by the bank.

The scheme is an initiative of Baobab Plus, while the microfinance allows access to sale outlets and financing, Chief Executive of Baobab Plus, Kolawole Osinowo, said.

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Osinowo said the objective of the scheme was to bring Nigerians who are outside the financial services net into the banking space and provide an opportunity for rating their creditworthiness.

“This rides on the success of our solar power scheme, which provides power to the last mile. Apart from the opportunity to get mobile devices and spread the payment, across three or six months, this will help to build a credit history for the customers.

“If you take up a device, and you are able to in 13 or 26 weeks without missing any installment, you have been able to show that you are creditworthy. That provides the microfinance bank with an opportunity to assess your creditworthiness,” Osinowo stated.

Subscribers are required to pay 20 per cent of the total cost of the device they intend to purchase and give the balance spread across three or six months.

The company employs three approaches to reduce default – credit rating algorithm, digital advisory and phone lock mechanism.

Head of Corporate Communication and Marketing, Rotimi Wusu, described the scheme as a win-win for the bank and its customers. He added that it would accelerate the growth of the bank’s customer base and bring more people into the financial system.

According to him, many customers without bank accounts will now have the opportunity to open one, and begin access to financial services.

He said it is one of the quickest ways to empower the people and connect them to the financial system.

The Nigeria Deposit Insurance Corporation (NDIC) has said that indicators in the financial system shows that the banking sector is safe and sound.

NDIC Managing Director, Bello Hassan disclosed this  yesterday at the ongoing NDIC Workshop for financial journalists in Port Harcourt.

He said: “If you want to determine whether the banking system is safe, and sound, there are certain indicators you use to judge. Things like liquidity ratio, capital adequacy and asset quality. Looking at those indicators, one can comfortably say that the banking system is safe and sound”.

He said this reality has not only put a demand on regulators and supervisors in the sector across the world to enhance surveillance, but it has also called for stronger collaborations, in order to deliver services that are laced with constantly improved values to the banking public and the society at large.

Speaking on the theme: “Boosting Depositors’ Confidence Amidst Emerging Issues and Challenges in the Banking System”, he explained that in the area of scaling-up the deposit insurance framework and ensuring faster and orderly resolutions of liquidated insured institutions, in May this year, with the active participation of the relevant stakeholders, the NDIC had developed and deployed the Single Customer View (SCV) platform for the Microfinance and Primary Mortgage Banks in order to strengthen our processes and procedure for data collection.

The platform would not only ensure availability of quality, timely and complete data to the NDIC, but would eliminate delays often experienced in reimbursing depositors following revocation of institutions’ licenses by the CBN.

Hassan said the final phase of the implementation of the SCV for Deposit Money Banks (DMBs) will be achieved through the incorporation of the SCV template as part of the on-going Integrated Regulatory Solution (IRS) jointly being developed with the CBN.

In the area of consumer protection, he said the corporation has strengthened its complaints resolution platforms, which include the Toll-Free Help Desk, social media handles and Complaints Desks in the Bank Examination, Special Insured Institutions and Claims Resolutions Departments, as well as our Zonal Offices, to receive and process complaints from depositors.

Earlier, Hassan disclosed that Hassan, said that while depositors of commercial banks, Payment Service Banks and subscribers of Mobile Money Operators (MMOs) are currently insured up to maximum limit of N500,000 per depositor per bank.

Depositors of microfinance banks  are guaranteed up to a maximum limit of N200,000 per depositor per bank.

He listed the affected banks as ABC Merchant Bank Limited, Allied Bank of Nigeria: Alpha Merchant Bank Plc;  Amicable Bank of Nigeria Limited,  Commerce Bank,  Commercial Trust Bank Limited, Continental Merchant Bank Plc and Cooperative & Commerce Bank Plc.

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Others are Eagle Bank, Financial Merchant Bank Limited,  Icon Limited (Merchant Bank): Ivory Merchant Bank, Kapital Merchant Bank Limited, Mercantile Bank of Nigeria Plc., Merchant Bank of Africa Limited, Nigeria Merchant Bank Plc., Pan African Bank Limited, Premier Commercial Bank Limited, Progress Bank of Nigeria; and Rims Merchant Bank Limited.

He said that the implication of this is that, through our dogged liquidation efforts, the Corporation has realised enough funds to fully pay all depositors of the listed banks. Similar Notices were also sent to Creditors of seven DMBS in-liquidation as well as depositors and ex-staff of Eurobank Savings & Loans, Okporo MFB and Eurofield MFB.

Hassan, who was represented by NDIC Director, Bashir Nuhu, explained that while the insured limits are periodically reviewed by the Board of the Corporation to ensure that majority of depositors are covered, it is important to add that depositors who have balances in excess of the insured sums are regularly paid the excess as liquidation dividends, which often extends to creditors and shareholders of the banks.

He said the essence of the corporation’s participation in the Lagos International Trade For over the years, is to continuously sensitize the banking community and general public about the existence of the Deposit Insurance Scheme (DIS) and the measure of safety offers to the financial system.

“This is important since public confidence in the financial system can only be enhanced when they are aware that their deposits are protected and that in the unlikely event of bank failure, there is an agency of government that would always safeguard their hard earned savings,” he said.