Nigeria’s external debt stood at $39.69 billion as of March 2022. During the same period, Egypt’s external debt was $157.8 billion. In the first quarter of 2022, while Nigeria borrowed $6.35 billion, Egypt incurred $12.8 billion additional foreign debt.
But using indicators such as inflation, GDP growth rate, currency strength and debt services, among others, the two countries are far apart. Nigeria’s inflation rose to 18.60 percent in June 2022, compared with Egypt’s 14.6 percent during the same period.
Nigeria’s real growth rate as of March 2022 was 3.11 percent while Egypt was expected to grow by as much as 5.3 percent between January and June 2022, and 5.2 percent for the entire 2022. The growth momentum is expected to be sustained in 2023. Meanwhile, the International Monetary Fund projected Nigeria’s growth rate to be 3.2 percent for 2022 and that is expected to continue into 2023.
The Egyptian pound currently trades 15.86 to a US dollar. On the contrary, the Nigerian naira trades at about 428.88 to the US dollar. Not only that, the Egyptian pound is among the top 10 strongest currencies on the African continent year to date but the naira is not.
Between January and March 2022, Nigeria spent $694.01 million on debt servicing while Egypt paid $24 billion from January to June 2022, offsetting parts of its international bonds and loans, according to Reuters.
Read also: Nigeria’s debt service ratio now world’s worst, says EIU
As at the end of the first quarter of 2022, Nigeria’s debt-to-GDP ratio stood at 23.3 percent. On the contrary, Africa’s third biggest economy, Egypt, had a debt-to-GDP ratio of about 84 percent. But while Egypt’s debt-to-GDP ratio when compared to Nigeria’s is much higher, the country does not have the kind of forex challenges Nigeria faces today. This is because the Egyptian pound is among the top 10 strongest currencies in Africa year to date.
Nigeria’s benchmark interest rate was raised by 250 basis points between March and June this year from 11.5 percent to 14 percent. On the other hand, Egypt’s central bank announced at the end of June 2022 Monetary Policy Meeting to keep their rates unchanged.
“In its meeting today, the Monetary Policy Committee decided to keep the Central Bank of Egypt’s overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged at 11.25 percent, 12.25 percent, and 11.75 percent, respectively. The discount rate was also kept unchanged at 11.75 percent,” the Central Bank of Egypt announced on June 23, 2022.
