External debt burden set to worsen amid further naira devaluation
NIGERIA'S external debt burden is expected to increase significantly if the naira continues to depreciate, analysts have warned. The ongoing slide of the local currency against the US dollar is likely to exacerbate the cost of servicing external debt, adding pressure to the country's fiscal position and threatening long-term economic stability.
A report by PriceWaterhouseCoopers (PwC) titled '2025 Nigeria Budget and Economic Outlook' highlights the risks of further devaluation on Nigeria's debt obligations. According to the report, fluctuations in exchange rates will heavily influence the country's total debt in 2025, with further depreciation of the Naira driving up external debt burdens.
The oversubscription of Nigeria's $2.2 billion Eurobond in 2024, which saw a peak order book of over $9 billion, signaled investors' confidence but also adds to the nation's growing debt stock. PwC cautions that relying heavily on debt instruments without corresponding revenue-generating investments risks crowding out private sector investment and worsening debt sustainability.
Data from the report shows that Nigeria's external debt rose by 89.7 per cent to N63.1 trillion in dollar terms by the second quarter of 2024, compared to N54.31 trillion in Q2 2023. In naira terms, external debt increased by 31.6 per cent to N71.2 trillion, driven by increased subscriptions to Federal Government bonds and a sharp 47 percent depreciation of the Naira, from N770.38/$ in 2023 to N1,470.19/$ in 2024.
PwC predicts that Nigeria's fiscal and exchange rate dynamics will shape its total debt burden in 2025. However, the report warns that the country may struggle to attract significant foreign investments if negative real returns persist.
The banking and manufacturing sectors recorded significant capital inflows in 2024, with $579.48 billion and $624.71 billion, respectively. The banking sector's recovery was attributed to strong economic fundamentals and revaluation gains, while the manufacturing sector benefited from industrialization efforts and policy reforms.
Despite these gains, Nigeria faces significant challenges in combating inflation and maintaining investor confidence. PwC noted that while advanced economies have begun reducing policy rates as inflation approaches target levels, Nigeria's Central Bank (CBN) raised its policy rate five times in 2024 to counter inflation, which surged to 34.6% in November 2024.
This tightening monetary policy has not been sufficient to offset the negative effects of inflation on real interest rates. PwC explained that Nigeria's negative real interest rates—where inflation surpasses interest rates—make local assets less attractive to international investors.
'If inflation rises in advanced economies in 2025, their central banks may increase policy rates, leading to a shift of funds toward markets offering positive real returns. This may exacerbate capital outflows from Nigeria, where negative real interest rates diminish the appeal of local assets,' the report stated.
PwC expressed cautious optimism that exchange rates could stabilize in 2025, supported by CBN reforms designed to boost foreign exchange inflows. However, the report emphasised the need for disciplined monetary policies to address liquidity challenges and control inflationary pressures.
In October 2024, Nigeria's money supply (M2) grew by 48.2 percent year-on-year to N107.7 trillion, while inflation surged to 34.6 percent in November. Despite an increase in the Monetary Policy Rate (MPR) to 27.5 percent, managing liquidity and achieving price stability remain daunting tasks.
Persistent imbalances between money supply growth and productivity are expected to undermine the CBN's efforts to effectively manage inflation in 2025. PwC stressed the importance of disciplined monetary policies to ensure long-term price stability and economic sustainability.
With these challenges, analysts caution that Nigeria's external debt burden will remain a critical issue unless urgent steps are taken to stabilize the currency, diversify revenue sources, and attract sustainable investments.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
a day ago
- Zawya
Nigeria: Naira may stabilise around $1.034 and $1.066 in near term —Experts
THE Nigerian National currency, naira, may stabilise around N1,600 and N1,650 in the near term, market experts have said. This submission was made by a number of experts who weighed in on the situation of the naira earlier this month. Renowned economist and Managing Director of Financial Derivatives Limited, Bismarck Rewane, who stated this at the June edition of the Lagos Business School Breakfast session, said that though the naira is currently undervalued at 26.82 percent, it is already approaching a fair value due to reforms. Rewane predicts that the naira will hover between N1,600 and N1,650 per dollar, citing improved FX market convergence and reduced speculative pressures. 'The spread is now within a N50 margin, meaning the naira is now fairly priced,' he said. He noted that the naira, though currently undervalued by 26.82 per cent is approaching a fair value due to reforms that have narrowed the gap between official and parallel market rates to within 1–3 per cent—a dramatic improvement from the 50–70 per cent disparity seen previously. In his broader economic forecast for June and July, Rewane anticipates a slight decline in inflation to 23.15 per cent Q1 2025 GDP growth of 3.4 per cent, and Brent crude trading between $60 and $63 per barrel, driven by increased OPEC+ output. He also projected Nigeria's oil production will rise to 1.5 million barrels per day, with petrol and diesel prices expected to drop to N845/litre and N950/litre respectively. Additionally, he expects the CBN's Monetary Policy Committee to reduce the benchmark interest rate by 50 basis points. Supporting Rewane's outlook, analysts at Meristem predicted relative stability for the naira, barring any sharp disruptions in foreign exchange inflows or spikes in speculative demand. Their May market report noted the naira appreciated in the official market but depreciated in the parallel market, widening the spread to N24.25/$ from N1.69/$ in April. This marked the first significant divergence since March 2025 and was attributed to persistent demand pressures and speculative activity amid global economic uncertainty. On the corporate front, Rewane reported strong revenue and profit growth, especially among companies sourcing locally and leveraging domestic credit markets. Increased issuance of commercial papers, higher yields, and improved FX transparency have enhanced investor sentiment, particularly in banking, infrastructure, and energy sectors. Cordros Capital analysts also linked the naira's recent strength to increased inflows from foreign portfolio investors, buoyed by easing global pressures and the CBN's proactive market interventions. They echoed the expectation of near-term stability as global headwinds moderate and investor interest in Nigeria's capital markets resurges. Overall, the consensus among analysts is that the naira, while currently undervalued, is on a path to medium-term stability, supported by economic reforms, improved investor confidence, and a narrowing official-parallel market rate gap. Despite closing at N1,553.12 to the US dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, June 5, 2025, experts are optimistic that the naira will stabilise within the range of N1,600 to N1,650 in the near term. According to data from the Central Bank of Nigeria (CBN), the naira appreciated by 2.3 per cent over the past week, up from N1,579.27/$ at the start of the week, suggesting growing confidence in the foreign exchange market. The naira also strengthened against the dollar from the previous day's rate of N1,565.46/$. Copyright © 2022 Nigerian Tribune Provided by SyndiGate Media Inc. (
Gulf Business
04-06-2025
- Gulf Business
Investing in 2025: Gulf Business panel to unpack UAE's hottest trends
Scenes from previous Gulf Business Breakfast Briefings. From booming IPO pipelines to surging interest in residence-by-investment schemes, the UAE remains one of the most compelling destinations for capital in 2025. To decode what's driving this momentum, Gulf Business will host its next flagship Breakfast Briefing panel event on June 25 at the Metropolitan Hotel Dubai, bringing together industry leaders for a morning of sharp analysis and forward-looking discussion. Under the theme 'UAE's hottest investment trends: what's driving growth in 2025' , the event promises a wide-ranging conversation on the forces shaping investor appetite — from shifting global mobility patterns and public listings to the impact of generational wealth transfer and digital disruption in finance. Set against the backdrop of the UAE's pro-investment policies and continued economic resilience, the panel will offer insights for both seasoned investors and new entrants looking to gain an edge in the region. A top-tier speaker lineup Among the confirmed speakers are: Yasmine Omari , head of wealth planning, Bank of Singapore Yogesh Khairajani , global market strategist, Century Financial Gemma Wild , head of global collaboration, MENA GPB, HSBC Manasvi Ghelani , associate director – customer engagement, Middle East Africa, Frost & Sullivan Muhammed Hassan , capital markets leader, PwC Dave Chaggar , sales director, Capital Club Limited Adel Mardini , CEO, Jetex Rahul Singh , managing director, Thrifty & Dollar Car Rental Claire Vuylsteke , director, Orbcom Karishma Hingorani , founder and podcaster, Karishma Konnect Three key sessions will headline the event: Global mobility & residence-by-investment Kicking off at 9:15am, this session explores how geopolitical uncertainty and changing tax landscapes are driving demand for alternative citizenship and relocation. Moderated by Orbcom's Claire Vuylsteke, the panel will discuss the role of residence-by-investment in securing personal freedom and capital diversification for HNWIs based in the UAE. IPO outlook: 2025 and beyond As Dubai and Abu Dhabi ramp up their listings strategies, this panel — moderated by Gulf Business Group Editor Gareth van Zyl — will explore what's next for capital markets in the region. Speakers from Century Financial, PwC and Frost & Sullivan will dissect the performance of recent IPOs, investor sentiment, and how the UAE stacks up against global exchanges. The great wealth transfer & new investment strategies With trillions of dollars set to shift hands globally over the coming decade, this final session looks at how family offices, private banks and platforms are adapting. Moderated by Karishma Hingorani, panellists from Bank of Singapore, HSBC and Capital Club will explore emerging investment behaviour among digital-native inheritors, and the future of wealth planning in the region. Invitation to investors and professionals The Gulf Business Breakfast Panel begins with registration and networking at 8:00am , followed by a welcome address and opening remarks. Attendance is free by invitation or registration, but places are limited. Whether you're a wealth advisor, entrepreneur, family office executive or institutional investor, this is a morning designed to help you make sense of the UAE's most powerful investment signals — and position accordingly.
Khaleej Times
02-06-2025
- Khaleej Times
Admissions open for PwC Academy's Young Employable Scholar (YES) programme as higher education landscape shifts
Fast-track programme offers ambitious UAE students a more accessible path to becoming chartered accountants amid rising education costs PwC Academy, the talent and skills development business of PwC Middle East, has opened admissions for the sixth edition of its highly successful Young Employable Scholar (YES) Programme. With 80% of graduates securing positions in leading organisations, this transformative higher education pathway combines the prestigious ACCA (the Association of Chartered Accountants) qualification with the UAE VAT Compliance Diploma and AI training. This two-and-a-half-year programme equips ambitious students with the fundamental skills needed to excel in a career in accounting and finance. The YES Programme reflects a wider shift in perception and expectation towards higher education. A recent report from World Economic Forum (WEF) and PwC found only around 50% of surveyed country's working populations are employed in professions that match their formal education level, highlighting a clear need for a more direct focus on job-relevant skills. The programme provides a combination of qualifications, practical training, and exposure to industry experts from a Big Four firm, directly preparing students for the work they will be performing. This new age approach is rapidly gaining recognition among high-achieving students seeking a first-class career in accounting or finance while side-stepping traditional higher education barriers. This cost and time-effective solution to higher education, tailor made by PwC professionals, targets the skills that will enable accountants to flourish in tomorrow's world. This accelerated timeline means graduates can start earning and advancing their careers while their peers are still studying. One recent graduate, who now works at PwC said: "The YES programme was a great experience that I couldn't recommend enough. The level of teaching and support I received throughout the programme was exceptional, and as a result I secured a role at PwC within a month of graduating." The YES Programme reflects a wider shift in professional qualification requirements. For example, a recent US study by specialist research platform Intelligent found 45% of surveyed companies are moving away from traditional degree requirements in favour of skills-based hiring. Beyond strengthening accounting and workplace skills, the programme is also a pathway to internship opportunities at renowned entities in the UAE, upon successful completion. For those seeking further education, graduates can advance directly to an MSc from University of London, bypassing traditional bachelor's degree requirements. Taimur Ali, PwC partner and head of qualifications at PwC Academy: 'The value of the YES programme goes far beyond cost and time savings. It provides students with a comprehensive academic experience, equipping them with the skills essential to excel in today's fast-paced world. Organisations in the region thrive on the agility and adaptability of their talent, which is why programmes such as YES are pivotal in shaping the leaders of tomorrow." The YES programme is open to exceptional high school graduates with strong academic performance in Mathematics and English who demonstrate leadership potential and commitment to a career in accounting or finance.
