VP Shettima sees debt to GDP decelerating to 30% after rebasing

..urges banks to resolve issues impeding financial, economic inclusion

Vice President Kashim Shettima, on Friday, projected that the country’s debt to GDP could ease from 52.8 percent presently to about 30 percent when the upcoming rebasing is concluded by January 2025.

Shettima did not provide the basis for this projection but said Nigeria has good reasons to conduct the rebasing exercise given the dynamism of the economy, even though low revenues and high debt now put at N134.27 trillion remain a major challenge.

He was speaking at the opening of the 14th annual Bankers’ Committee Retreat in Abuja with the theme: “contract and commitment to national development and economic growth.”

The National Bureau for Statistics (NBS) is working on rebasing the GDP and Consumer Price Index after 10 years, as against the five years recommended by the World Bank. The last rebasing in 2014 pushed up Nigeria to an N80.22 trillion ($509.9bn) economy, the largest in Africa.

“Perhaps the results, when announced in January 2025 will give us a spur and a spring to more logically pursue the targeted results.

“Nigerians say many things about our debt level, which is currently at 52% but which may go back down to 30% post-rebasing, but it is evident that public revenues are a bigger issue compared to peers like Kenya and South Africa,” he told the bankers.

Represented by Tope Fasua, Special Adviser on Economic Affairs in the office of the Vice President, Shettima noted that banks have a critical role in driving economic prospects and achieving President Tinubu’s $1 Tltrillion economy target. This could raise the country’s per capita GDP to over $4,000 from current levels of barely $1,000.

According to him, banks’ credit facilities to key productive sectors, facilitation and syndication of large ticket loans, and long-term view in interactions with the market and economy will be crucial in achieving the economic expansion as targeted.

While urging them to consolidate their role as catalysts for economic growth and development, Shettima appealed strongly to the committee to urgently clear up thorny issues in the sector, some of which are impeding efforts at financial and economic inclusion.

“Nigerians complain bitterly that they are unable to access even minimal cash when most needed. There seems to have been some moral hazard and adverse selection problem with the involvement of street-side POS merchants.

“Nigerians complain about high and arbitrary charges and exploitation by rogue agents which we are sure you will be able to tackle, with concerted efforts.

“We need more initiatives towards the financing of MSMEs, and we urge you to continue to support the efforts of the federal government in the area of consumer credit culture,” he stressed.

On how ongoing painful reforms have galvanised positives for the economy, the vice president highlighted that, for instance, although naira unification has weakened the currency, it has also spurred some behavioral adjustments among Nigerians.

“We see that today, Nigerians have cut back in some foreign travels, foreign education has slowed down to the extent that many foreign universities are feeling the pains, but there is more focus on local educational institution and many world-standard facilities have now debuted in Nigeria.”

He noted that weakening of the naira also has driven a spike in exports. First quarter trade surplus of $4 billion increased to $4.5 billion by second quarter; economy grew by 3.46% in Q3 2024, while the manufacturing sector has witnessed capital inflows, the VP added.

He said the development has encouraged government to continue the reforms, which he acknowledged are painful but pleaded for time to pull them through.

In his welcome address, Yemi Cardoso, governor, Central Bank of Nigeria (CBN) corroborated the VP’s position that current challenges “is not all bleak”.

There have been significant strides made by both government and private partners in leveraging opportunities for economic revamp.

However, while progress has been steady, there is still more work ahead, he added.

“The work before us requires focus, innovation, and unwavering resolve to reshape our collective future,” he noted, adding that the retreat is not merely a forum for dialogue but a call to action.