Re: Can Nigeria really slow down on borrowing?

I have been an avid follower of Anthony’s column and I would like to commend the efforts he puts into researching and writing his articles. I want to make a comment on a point he made on Nigeria’s Total Debt to 2016 GDP ratio in his most recent column.

He stated that Nigeria’s total debt stock stood at ₦19.2 trillion ($62.9 billion, using exchange rate of ₦305/$1) as at the end of March this year. He also stated that Nigeria’s total debt stock to 2016 GDP stands at 28 percent, which I also agree is relatively low compared to global average. But I believe it is much lower than this figure.

According to the International Monetary Fund (IMF) and the World Bank, Nigeria’s 2016 GDP is recorded as $405.95 billion and $405.08 billion respectively. Using these figures to calculate Nigeria’s Total Debt to GDP ratio will result in 15.49 and 15.53 percent respectively as opposed to 28 percent.

I am aware that he might have used the figure from the National Bureau of Statistics (NBS) which puts Nigeria’s 2016 GDP at ₦67.98 trillion ($222.89 billion, using exchange rate of ₦305/$1) and as a result, obtained 28 percent Total Debt to GDP ratio. However, this figure is clearly stated as ‘’real GDP’’. Firstly, nominal GDP is mostly used in calculating Total Debt to GDP ratio. Nominal GDP includes both current price and growth, whereas real GDP is pure growth hence it is mostly calculated in percentage rates from a designated base year. Nominal GDP is used because when repaying debt, one pays back in the current value/price of money not in an inflation-adjusted price/value of money. I am also certain that the total debt stock of ₦19.2 trillion ($62.9 billion, using exchange rate of ₦305/$1) he stated in the article is in nominal terms. Therefore, if you have a numerator in nominal terms and a denominator in real terms you end up with figures, which is difficult to interpret. Moreover, it is usually assumed, as in the case of Anthony’s article, that when a report does not specify the type of GDP, then it is likely nominal GDP. Lastly, I am always very cautious when using data from the NBS, no disrespect to the work they do, but I find so many errors in their works. An example is on the last paragraph of page 3 of the GDP Q4 2016 Full Report stating ‘’For full year 2016, aggregate nominal GDP stood at ₦101,598,482.13 compared to ₦94,144,960.45’’. This figure should be in millions but of course the unit was clearly omitted in an official report that will be referenced by so many people including the government.

As I stand to be corrected, I would be interested to know the source Anthony used to obtain Nigeria’s 2016 GDP or how he arrived at the 28 percent Total Debt to GDP ratio of Nigeria.

I am sure this is probably a minor error but for the sake of credible journalism and accurate presentation of facts I hope this is corrected to prevent misinformation when readers quote you as a source. Thank you.

ALABA OLAWOYE, MPHARM, Nigeria