Five fascinating business facts – Part 37

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The total debt owed by state governments in Nigeria continue to balloon and latest data show that twenty-three states have already overshot their borrowing threshold. The debt burden is rising at a time of declining revenues. When one drills down, you find a more chaotic picture – only six of these heavily indebted states have enough internally generated revenue, IGR to cover only interest payments on their debts. Yet another miserable picture –

Except for Lagos where all proceeds from bond issuance goes into capital investment, a good part of the borrowing of the other states goes into recurrent expenditure.

14 million

You do not have to look far to find the root cause of Nigeria’s growing debt overhang and perhaps more importantly, why its tax to GDP ratio is abysmal. Of the 70 million adult Nigerians said to be engaged in one form of economic activity or the other, only 14 million are on the tax register. Nigeria’s tax to GDP ratio is stuck at the lower rung of 6% while of its peers can be found in the 15% level.

18,000

You must have heard enough now about how healthcare standards in Nigeria have fallen. Not long ago, an old Nigerian ambassador who had served in several African countries reminisced about how senior government ministers in countries where he served will come to him to get recommendations to come to the University College Hospital in Ibadan for medical care when they were sick. Like most things, we have lost it. Small Mauritius with a better run economy now receives 18,000 medical tourists yearly as its seeks to profit from the country’s massive tourist attractions.

0.8

Per capita consumption of shoes in Africa is only 0.8 compared to the global average of 3.5. With Nigeria having more babies annually that the number born in the whole of the European union, there is sure a good future the talented makers of shoes in Aba.

10,000

Not only banks are too big to fail. On its site, KPMG South Africa which employs more than 10,000 workers, says “we to create sustainable, long-term economic growth, not just for our member firms and their clients but for the broader society, too. We seek to be a good corporate citizen, making a real difference to the communities in which we operate.” Forget the promise of being good citizens, KPMG’s survival in South Africa may depend on just its size. The Reserve Bank of South Africa is now reported to have told banks in the country that the audit firm is too big to fail and that they cannot now fire the auditor simply on account of KPMG’s indictment in the state capture scandal now rocking the country. KPMG sacked its entire South African leadership two weeks ago as the scandal swelled. In South Africa, no bank can fire its auditor without approval of the Reserve bank.