Business
Nigeria’s Debt Service To Revenue Ratio Rises To 48%
The revision of the 2020 revenue framework has raised the Federal Government’s debt service to revenue ratio from the initial 29 per cent to 48 per cent.
The Executive last Wednesday sent a revised 2020 budget proposal to the National Assembly following a drop in crude oil prices caused by the impact of the coronavirus pandemic.
The Federal Government had in the budget proposal revised downward the revenue projection for the 2020 fiscal period by N3.3tn from the initial approved amount of N8.41tn to N5.08tn.
The reduction in revenue projection was due to the impact of the coronavirus pandemic.
The pandemic has so far led to unprecedented drop in global crude oil prices.
Based on the revenue parameters upon which the revised proposal was made, the Federal Government reduced the oil price benchmark from $57 per barrel to $30 per barrel.
Similarly, the oil production volume was cut from the initial 2.18 million barrels per day to 1.7 million barrels per day.
Before the revision, the Federal Government had projected to generate about N8.42tn revenue to fund the budget, while debt service was estimated to gulp about N2.45tn
This implies that 29 per cent of the revenue of government in the 2020 fiscal year would have been spent to service debt obligations.
However, following the revision in the revenue framework which resulted in a reduction of projected revenue to N5.08tn, with debt service unchanged, the gap in revenue to debt service ratio has now been widened to 48 per cent.
Speaking on the budget cut, a former Director-General, West African Institute of Financial and Economic Management, Prof Akpan Ekpo, said that the N2.45tn allocated for debt service should be renegotiated.
He said if the debt service obligation was renegotiated, it would free up funds that could be channelled for critical infrastructure projects such as power, rail and roads.
Ekpo added that sectors such as education and health should be given priority in the current fiscal period.
He said: “It’s a drastic cut but the priority should be power, rail and roads in terms of hard infrastructure. The soft infrastructure for human development should be education and health.
“Cost of governance is too high and this should be reduced while the excess channelled to infrastructure.”
“The budget has a huge amount allocated for debt servicing, this could be renegotiated and whatever that can be saved from there could be channelled for capital projects.”
A former Director-General, Abuja Chamber of Commerce and Industry, Chijioke Ekechukwu, said that the cut in the budget was expected due to the continuous drop in crude oil price.
He said expenditures as such security votes, constituency projects, unnecessary allowances and travels that would increase the cost of governance should be dropped.
Ekechukwu said, “It was expected that the Federal Government would cut down the budget in line with oil price realities.
“The cut should concentrate on expenditure that will not contribute to increase in standard of living and quality of life.”
Kolomoni Microfinance Bank has awarded grants to five female entrepreneurs to boost their businesses as part of its commitment to promoting women in business.
The initiative, organized to mark International Women’s Day, was themed “Accelerate Her Growth.”
According to the bank, the decision to support women was inspired by World Bank data, which shows that 41 percent of Nigeria’s micro-businesses are owned by women.
Delivering the keynote address, business strategist, Ebun Akinwale, emphasized that entrepreneurship requires resilience, creativity, and passion.
She illustrated this by recounting her own business challenges and highlighting the critical role passion plays in overcoming obstacles.
The event underscored Kolomoni’s mission to empower women and support small businesses in Nigeria.
Other speakers at the occasion were Odunayo Oyebolu, a seasoned entrepreneur; Victori Ajiboye, a marketing strategist with global experience; and Simi Ojumu, a finance expert.
The beneficiaries said the financial support was a validation of their hard work and a boost of confidence towards scaling through in their businesses.
The winners were selected after sharing their entrepreneurial journeys and presenting business proposals for financial assistance from the bank.
The 8th edition of the Nigeria Small and Medium Enterprises (SMEs) Summit and Awards (Nigeria SMEAwards) is set to take place in Lagos for the first time in its history, marking a significant milestone for this prestigious event.
Endorsed by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), the annual awards celebrate the entrepreneurial spirit driving Nigeria’s economy.
The visionary convener of NigeriaSMEAwards 2025, Adedayo Olalekan, said, “Governors from Zamfara, Sokoto, Ebonyi, Borno, Enugu, Ekiti, Benue, and Kaduna States have all implemented transformative initiatives that have greatly benefitted local enterprises.
“Their contributions will serve as a beacon of inspiration for the nation.”
Speaking at a recent press conference in Lagos, Olalekan emphasised that the event would introduce a fresh and unique approach, moving away from tradition.
“Despite economic challenges, Nigerians continue to show an unwavering commitment to progress”, he said.
He noted that the awards will not only honor outstanding individuals, but also recognise the critical role state governments play in nurturing vibrant SMEs.
“State governments have been instrumental in fostering a supportive environment for SMEs, which in turn benefits both the awardees and the larger economy.
“With major banks like Providus, Access, and First Banks competing for top honors, the 8th NigeriaSMEAwards promises to be a night of celebration, recognising exceptional contributions to Nigeria’s SME landscape”, Olalekan added.
Amid global challenges such as inflation, geopolitical instability, and the ongoing conflict in Ukraine, Nigerians continue to show remarkable resilience.
Their efforts, according to reports, have contributed to job creation, economic growth, and overall prosperity, with SMEs at the forefront of this success.
This year’s awards will recognise governors who have made significant strides in advancing the SME sector within their states.
Small and Medium Enterprises (SMEs) consultants in Rivers State have called on entrepreneurs to be focused and avoid distractions.
The experts, who were speaking on the recent developments about the change of leadership in the state, said entrepreneurs need to put more efforts in their businesses in order to break even in the present situation in Rivers State.
Speaking in a chat with The Tide, an international SMEs consultant, Amb. Larry Goodwill Ajiola, said the political moves is capable of distracting SMEs who are not grounded in their businesses, adding that “the serious minded business men and women would utilise the opportunity to increase their revenues”.
Amb Ajiola, who is the President and Chief Executive Officer (CEO) of Rumuomasi Co-operative and Credit Society Limited, Port Harcourt, said, “Rugged entrepreneurs look out for business opportunities in situations around them, whether good or bad”.
He reiterated that the loan facility given to 3,000 SMEs in the state revived and expanded businesses, adding that the empowered businesses should continue to push, no matter the situation.
“credit is a powerful tool for achieving financial security.
“We can only keep imagin the economic value that the over 3,000 MSMEs would add to the positive economic dynamics of Rivers State and the Local Government Areas in terms of Gross Domestic Prooduct (GDP), increased tax returns, employment creation, income distribution, and production of goods and services”, he said.
Another SMEs Expert, a business consultant and SMEs trainer, Mr. Chisom Sam-Orji, in his advice, noted that every SME in the state should realize that change is the only constant thing.
He said SMEs should also know that “tough times never last, but tough people do”, adding the need for every entrepreneur to stay focused on creating value and remain resilient.
“This is not the time to be distracted by every noise around your space, but to maximize every time you have to focus on the essentials and keep creating value.
“For some people, it may just be the time to diversify, create new products and services to serve a new or existing market. But this must be based on the facts available to you via research and market surveys”, he said.
The SMEs expert also said the present time in the life of an entrepreneur is a time to cut off unnecessary excesses that surround one’s business.
“Those extra costs that may hamper your growth in this season and beyond, and focus on just essentials.
“SMEs should find certain leverages that are available to aid their business growth. This could be in form of grants, knowledge, and other leverage tools.
“Collaboration is one big way to grow in this season. Finding ways to collaborate with like minds instead of competing could enable a product or service gain advantage in the market and beyond.
“They should also find ways to sustain and grow their customer relationship as this is key to sustaining business flow. They must seek new and efficient ways to serve their customers and gain their loyalty”, he stated.
He further called on every entrepreneur to keep building capacity and never take their eyes off their visions, adding the need to muster every courage it takes to keep building and moving forward.
Lilian Peters