80.7%. That is the magic number in Nigeria, the debt service to revenue ratio for the 2023 national budget. In other words, you pay N81 to service debt for every N100 received as revenue. If you swap that debt service for marketing cost, you get the financial trajectory of some e-commerce companies in Africa. Of course, we know the destinations and outcomes for those companies – and the reason Nigeria must avoid packing debts when the debts are not used for productive endeavours which can earn revenue to pay them off.
Nigeria’s debt service to revenue ratio is reported as 80.7% according to the information contained in the 2023 Budget presentation made by the Minister of Finance.
The report reveals a total debt service of N5.2 trillion in the first 11 months of 2022 out of a total revenue of N6.49 trillion.
That said, Buhari has innovated well on revenue collection. Our tax agency has deployed new playbooks. Our business received an email on Jan 2nd on ITF fee, and I was like: really, the government was already open for 2023.
Of course, we need to innovate on growth policies at the same rate we have put on tax collections. But generally, the government is doing better on revenue – those bars continue to go up even though I would have wished, it rises faster. If we keep the debts off, we will have more funds to take care of things in Nigeria. Right now, it is a vicious circle as the more debt servicing rises, the fewer are the funds available for education, healthcare, etc.
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Indeed, we can learn from agency banking and explore how to use some of those structures to improve tax collections.
This year also saw an increase in Agent Banking with an all-time high of about 1.4 million agents spread across the country, through the Shared Agent Network Expansion Facility (SANEF). Consequently, the volume of PoS transactions rose by 24.3 % to 878.4 million as of September 2022, from 706.8 million in the corresponding time last year. The value stood at 4.6 trillion.
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