Nigeria seeks to convert 10 trillion naira CBN financing to 30-year debt

Nigeria, a country facing economic challenges, has recently made significant moves to address its financial situation. The Debt Management Office (DMO) disclosed plans to convert the 10 trillion naira Central Bank overdraft into 30-year notes, a move aimed at improving transparency in government financing. Dayo Amzat, CEO of Zedcrest Capital, shared insights on this development in an interview with CNBC Africa. Amzat highlighted the importance of transparency in the relationship between the federal government and the central bank, emphasizing the need for clarity in financial processes. He acknowledged the influence of external organizations like the IMF and the World Bank in promoting transparency in financial dealings. The conversion of the CBN overdraft into long-term notes is seen as a positive step forward, providing a clear repayment plan and revealing the impact of the debt on the economy. Regarding the ratio of the overdraft to GDP, Amzat discussed how the current system lacked transparency but noted that the recent adjustment of debt thresholds provided some flexibility for borrowing. He raised concerns about the global trend of central banks expanding their balance sheets to support government spending during crises, citing the need for transparency in such practices. The discussion turned to the implications of a two-year moratorium on debt payments, with Amzat acknowledging the temporary nature of the solution. He highlighted the challenges of high interest costs on the debt stock and the importance of reevaluating the financial situation once the crisis subsides. Amzat also commented on Nigeria's infrastructure initiatives, particularly the creation of a 1 trillion naira Infrastructure company to address the country's infrastructure gap. Despite positive steps taken by the government to ramp up infrastructure investments, Nigeria still lags behind global benchmarks in infrastructure stock. Key projects funded by foreign loans have aimed to improve transportation and connectivity in the country, but more strategic prioritization of infrastructure projects is needed. In conclusion, Nigeria's efforts to convert its CBN overdraft, implement a moratorium on debt payments, and invest in critical infrastructure reflect the government's commitment to addressing economic challenges. Transparency, strategic planning, and international partnerships will be crucial in navigating the country's financial landscape, as Nigeria seeks to stabilize its economy and foster sustainable growth.