$7.5bn hidden debt raises fresh concerns around Nigeria’s Eurobond quest

The recent discovery that Nigeria owes about $7.5 billion to local contractors has become another issue that may mar Nigeria’s quest to lure foreign investors into its economy via the $1 billion bond, tagged Eurobond.

The said debt was uncovered after the government had named Citigroup, Standard Chartered Bank and Stanbic IBTC Bank to manage the bond, three weeks to start of the issuance process in January 2017.

However, it was learnt that some foreign interest groups interested in the bond had raised the question of the debt, which Nigeria had failed to mention in its debt profile report, prior to the commencement of the road show in August, aimed at sensitising would-be buyers.

“The amount is not something that should be treated the way present and past administrations had done.

“Granted that it is mainly from contracts and purchases by the three tiers of government, the Federal owes the substantive amount. It needed to have been made known to all parties, including the IMF, World Bank and African Development Bank,” said Peter Obianuju, a financial analyst.

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But a foreign news outfit quoted Nigeria’s Finance Minister, Kemi Adeosun, on Tuesday as confirming that the debts were owed to contractors, oil marketers, exporters and others, promising that efforts were on to have it all cleared before 2032.

She said its discovery would not affect the positive result anticipated from the Eurobond programme, nor any loan facility that Nigeria is applying for through the creditor institutions.

Still, the fact that the debts take more than five per cent of the country’s ratio-to-debt profile (RDP), from the total of 20 per cent RDP of the GDP is of concern to observers.

A senior DMO official said there is no cause for alarm, adding that there could have been a problem if Nigeria was found wanting in all its bonds and treasury bills dealings in the past.

“Foreign and local investors are expected to patronize the Eurobond as any other financial instrument, of which Nigeria scores more than 80 per cent in performance, “ he stated.

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