Nigeria’s financial landscape continues to navigate complex challenges as the country faces both market volatility and mounting public debt pressures. This week’s data from the Nigerian Exchange (NGX) Limited and analysis from Afrinvest Research paint a picture of an economy at a critical juncture, requiring careful fiscal management and strategic economic planning.
Debt Concerns Emerge as IMF Calls for Fiscal Discipline
In a recent country visit, International Monetary Fund (IMF) First Deputy Managing Director Gita Gopinath described Nigeria’s debt level as “moderate rather than high risk,” offering a cautiously optimistic assessment of the country’s fiscal position. However, her remarks underscored the urgent need for the government to strengthen domestic revenue generation and implement fiscal discipline.
“The savings from fuel subsidy removal should be strategically redirected into government reserves rather than spent inefficiently,” Gopinath emphasized, highlighting concerns about Nigeria’s reliance on borrowing.
Despite this moderate assessment, data from the Debt Management Office (DMO) reveals concerning trends. Total public debt surged to ₦142.3tn in Q3 2024—the highest nominal level on record—driven by a widening budget deficit and the impact of naira depreciation on external debt. Domestic debt rose 3.3% quarter-on-quarter to ₦73.4tn, while external debt jumped 9.2% to ₦68.9tn, reflecting an 80.2% increase largely due to currency fluctuations.
The total public debt-to-GDP ratio reached 52.8%, exceeding the 40.0% limit set in the 2020-2023 Medium-Term Debt Management Strategy and approaching the 55.0% risk threshold for developing countries.
Equity Market Experiences Bearish Week
The Nigerian equity market continued its downward trajectory this week, with the NGX All-Share Index (ASI) declining 1.2% to 106,538.60 points. Market capitalization shed 0.7% (₦476.0bn) to ₦66.7tn, while year-to-date returns trimmed to 3.5%.
Trading activity waned as average volume and value traded dipped 1.6% and 8.1% week-on-week to 363.6m units and ₦9.4bn, respectively. The Banking and Insurance indices led the decline, losing 2.9% and 2.3% respectively, while the Consumer Goods and AFR-ICT indices fell 1.7% and 1.3%.
Top gainers for the week included Tantalizers Plc (+36.3%), UH Real Estate Investment Trust (+28.6%), and Livestock Feeds Plc (+10.0%), while Eterna Plc (-18.7%), Transnational Corporation Plc (-17.7%), and FCMB Group Plc (-14.2%) led the decliners.
Corporate Developments and Market Outlook
Notable corporate activity included Guinness Nigeria Plc’s takeover offer notice for up to 481.36m ordinary shares at ₦81.60 per share by N-Seven Nigeria Limited, a subsidiary of the Tolaram Group. This follows N-Seven’s acquisition of a controlling 58.02% stake last October.
Looking ahead, analysts anticipate a mild positive swing in market performance, driven by bargain-hunting opportunities amid easing yields in the fixed income market segment.
Economic Challenges and Future Prospects
While Nigeria’s oil production rose to 1.54mbpd in January 2025—the highest in three years—it remains below the government’s 2.0mbpd target necessary to generate 48.0% of the 2025 revenue projection. Fiscal challenges may intensify if efforts to revitalize the agriculture and manufacturing sectors fail to deliver expected outcomes.
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The potential for GDP rebasing to improve debt-to-GDP readings offers some optimism, though sustainable growth will require addressing infrastructure deficits and security concerns.
Looking Ahead
As Nigeria navigates these economic headwinds, the coming weeks will be critical in determining whether policymakers can implement the necessary reforms to strengthen revenue streams, reduce debt reliance, and create conditions for sustainable market recovery. Investors remain cautious but watchful, balancing concerns about fiscal sustainability against the potential for strategic investments to catalyze long-term growth.
