Nigeria debt

By Matthew Page, Council on Foreign Relations

Africa’s largest economy is struggling to find its feet. Sliding oil prices threaten to derail President Muhammadu Buhari’s efforts to put Nigeria’s public finances back in order, fund planned infrastructure spending, and field much-needed social programs. Until global crude prices rebound or he undertakes more ambitious reforms, Mr Buhari almost certainly will need to borrow just to make ends meet.

The good news for Mr Buhari is federal government debt is relatively low as a percentage of GDP, which was estimated at $488bn in 2013. In 2005, Nigeria struck a deal with Paris Club lenders to write off over half of the country’s $30bn debt. Since then, however, Nigeria’s debt profile has steadily grown. As of the end of last year, Abuja owed domestic and international creditors roughly $55bn. Read more

By Peter Leger, Coronation Fund Managers

So you thought a six-month break on a desert island looked appealing and spent long hours in silent meditation, reflecting on self-actualisation, harmony and humanity’s ceaseless race to consume the planet. Now you’ve just made the return journey to find that the oil price collapsed from over $110/barrel to less than $50. Peak theorists having turned into piqued theorists. You didn’t see that coming. And, frankly, neither did we. Nor did we expect to see the Swiss franc jump 28 per cent in a single day – as it did recently.

The lesson being that extreme volatility has to be an assumption when building portfolios, and doubly so when investing in frontier markets, where volatility is often amplified. Read more

Nigeria has overtaken South Africa to become Africa’s largest economy after the government released updated figures that raised the country’s gross domestic product by 89 per cent to $509bn.

The re-calculation rightly put most Nigerian officials in celebratory mood. But Ngozi Okonjo-Iweala, the country’s finance minister (pictured), offered also a cautious note: the new figures do highlight some acute problems. Read more

The EM debt rally is pushing some countries into new territory. Nigeria’s public finances have received a boost on Wednesday with its borrowing costs at auction hitting record lows.

N30bn ($190m) of 10 year government bonds were sold with an 11.9 per cent yield, with investor inflows pushing the naira higher to build upon the strong gains made by the west African oil exporter’s currency this year. Read more