PARIS–(BUSINESS WIRE)–Andrew Roche, managing partner of the Paris-based financial consultancy
Finexem, will discuss the growing Nigerian debt trap in a conference
call with news media, financial analysts and key stakeholders on
Thursday, May 23. The call will take place at 4 p.m. Paris time (3 p.m.
Lagos & London; 10 a.m. New York & Washington, D.C.)
Roche, an expert in African sovereign debt, recently released his
analysis of the worsening situation, “Nigeria’s External Debt: The
Post-Election Boomerang.” He noted that Nigerian debt is fast
approaching levels last seen in the days preceding a 2005 bailout and
that the government must take decisive measures to stop the problem from
getting worse. He also highlighted a key issue that is often overlooked:
Nigeria has an ongoing challenge in revenue mobilization, and urgently
needs fiscal consolidation to be able to face high debt servicing costs
relative to federal government revenues.
“The Government should take advantage of its renewed mandate to
implement measures to ensure the external position of Nigeria does not
deteriorate,” Roche wrote in his paper. “This would begin by resolving
outstanding disputed financial obligations and carefully considering new
borrowing, thereby signaling to the financial community prudent fiscal
stewardship and a transparent and constructive framework for future
Roche noted that Nigeria’s financial obligations include USD $22.1
billion in external debt, a 115 percent increase in just three years.
Nigeria is exposed to additional financial liabilities through
arbitration awards, including a judgement of USD $8.9 billion to a
private contractor, Process and Industrial Development Limited, over a
failed energy project. At the same time, Sunrise Power and Transmission,
a Nigerian company, has filed a USD $2.3 billion claim with
International Chamber of Commerce (ICC) in Paris over breach of contract
related to the Mambilla power project.
The growing exposure is leading investors to speculate about the
sustainability of Nigeria’s new debt profile given the nation’s
dependency on high oil prices and the oil supply caps imposed by OPEC.
“Questions abound concerning the end use of borrowed funds, the success
of reforms and the ongoing vulnerability of Nigeria’s fiscal position
given its growing external debt burden,” Roche wrote.
In comments to the Financial Times earlier this month, Roche
asked whether the government was using borrowed cash to patch up holes
in budgets, rather than investing in infrastructure or industry, or in
efforts to diversify the economy from a heavy dependence on oil. “They
have borrowed quite a bit, but where is the money being spent?” Roche
said in the Financial Times.
According to a report last week on AllAfrica.com, the borrowed money has
been used to “reflate” the economy and take the country out of recession
as part of Nigeria’s Economic Recovery and Growth Plan. “When we came on
board and we made an assessment, it was clear that our country was going
into recession,” Zainab Ahmed, Nigeria’s Minister of Finance, told a
press conference in Abuja. “When we did research on the best way to
reverse the recession, it was found that was the best way to reflate the
economy (was) putting resources in the economy so that consumption will
Despite this strategy, Nigeria’s economy slowed to 2.01% in the first
quarter as the country’s dominant oil sector shrank, the National Bureau
of Statistics said on Monday.
In the Wednesday conference call, Roche will present an in-depth
overview of the situation and take questions from interested parties.
To access Andrew Roche’s white paper on Nigerian debt:
To participate in Wednesday’s call:
Please use the dial-in or join us via web link with the information
provided below and use Conference ID: Finexem.
If your country toll-free number is not listed, please contact us and we
will provide the international toll-free number at your convenience.
- U.S.: 866-952-8559
- U.K.: 0-808-101-1183
- France: 080 091 2273
- Nigeria: 785-424-1743
We will also be offering an online presentation which can be accessed
Web Presentation Link: http://connexevent.adobeconnect.com/finexem/
Washington, D.C./Douglas Kiker