 Nigeria's fiscal sustainability is becoming a growing concern as the country's total public sector debt stoke has set from 46.25 trillion Naira to 81 trillion Naira as reviewed in the Debt Sustainability Report published by the Debt Management Office, Dean M.O. Now findings have shown that Nigeria's debt service in cost has increased by 55.71% to 1.24 trillion Naira in three months. According to data obtained from the Debt Management Office, between October and December 2022, Nigeria spent 406.77 billion Naira on domestic debt servicing, while it spent 312.27 million dollars on external debt servicing, giving a total of 550.51 billion Naira. However, between January and March 2023, Nigeria spent 874.13 billion Naira on domestic debt servicing, while it spent 801.36 million dollars on external debt servicing, giving a total of 1.24 trillion Naira. We will keep our eye on Nigeria's fiscal sustainability. Also, the Lagos Chamber of Commerce and Industry, LCCI, has asked the federal government to take the measures in response to the rise in inflation and its impact on households. Well, stay with us as we analyze these issues. I am Justin Akadone. Business Insights starts right now. Welcome back before we get to the matter of the day. Let us just show you just how to write an informal proposal over right back. Stay with us. Writing an informal proposal. The thought of writing a proposal overwhelms many people. But the task does not have to be daunting. Even my proposals are written when people need to ask permission to make a purchase, undertake a project or write a paper. This type of proposal is a way of persuasively putting forth an idea and asking for action to be taking on that idea. When writing a proposal, consider who will read the proposal and what that person may or may not already know about what you are proposing. Follow these steps when writing a proposal. 1. State your proposal. Do this clearly and concisely so that the reader knows immediately why you are writing. 2. Give some background information. Explain why you are proposing your suggestion so that the reader has a better understanding of the problem. 3. State a solution to the problem. This is where you give specifics about your suggestion. 4. Show costs. Lay out any costs that will be involved. 5. Conclusion. Wrap it up by restating the problem and the proposed solution. Welcome back. It's the Business Insights and Plus TV Africa. I am being joined by Gospel Obele, economist and together I will be looking at Nigeria's public debt stock and of course the issue of inflation and how it's impacting on Nigerians. Many thanks for joining me, Gospel Obele. Thank you for having me, Jay. Good morning. Good morning to you. Now according to the debt sustainability report published by the DMO, Nigeria's total debt stock has sought from $46.25 trillion to $81 trillion. Do you share any concerns as by the country meeting up with its obligations judging by the present day realities? Well, the best we can do right now is to restructure obligations in terms of servicing obligations and if possible even restructure repayment and all of those dynamics. And that's the safest way reasons why the current President Bola Amitinibu is very much inclined on the revenue side and closing up all the necessary gaps that exist to fix these issues. However, there is no need to internally begin to think and rework the economics of debt financing, which technically we can't really do without because we are not even generating enough. So whatever President Bola Amitinibu thinks to achieve or thinks to do within the context of revenue mobilization will not still be enough because the markets and the productive sectors are not really working at maximum potential or even mid-level potential to generate the weight of revenue that's required to finance the developmental project. So however, there's still going to be some form of reliance of debt financing. But we're expecting that some little more, the leverage around investors' confidence has been built due to the unification of the rates recently would enable that conversation and that negotiation of debt servicing, debt obligations as we go on into the future. All right, now let's still stay with the report. According to it, the federal government's projected revenue of 10 trillion Nair would push the debt to GDP ratio close to about the 40% limit that is reaching about 37.1%. In comparison, the debt service to revenue ratio would come in as high as 73.5%. I just want you to break all of that. Now what does that really mean? Sorry to say again. I said that there's some figures that was released by the DMO talking about debt service ratio and all of that. But let me specifically quote the report. It said the federal government's projected revenue of 10 trillion Naira would push the debt to GDP ratio close to about 40% limits. In comparison, the debt service to revenue ratio would come in as high as 73.5%. What does all of that mean? Yes, thank you so much. Debt servicing to revenue ratio simply means that the amount of your revenue garnered every year, all right, that fiscal year that is used to service debt. So if you're looking at that 75%, it means that 75% of total government revenue at the revenue list of things will be used to service debt. And servicing debt doesn't necessarily mean that you're repaying it. It technically means that you are paying the interest charge on those debts, and maybe a little percentage of the principal, depending on the agreement and the structuring contracts you had with the principal. So what that simply means is that there may be little or nothing significantly left for financing public sector or even public sector finance or public expenditure to a very large extent. And it's also a bit worrisome, again, because when you also look at the block of revenue potential of the 2023 budget, and you're taking 75% of that chunk for servicing, it tells us that we're in a really, really fiscal mess, and there are big concerns around what fiscal sustainability means. So give or take the primary low-hanging food for the president now would be to expand revenue, because if you expand revenue, it means that you'll be taking a lesser percentage of the revenue to service debt. And technically means you have more money to fund your developmental aspirations. Secondly, would be to also leverage the growing, quote unquote, the perceived growing investors' confidence, and then take advantage of that to find ways to rake in more development financing streams for infrastructure or investment purposes. The very large, big ticket sustainability pathway in the whole of this thing, I mean, I mean, the only, the most sustainable way around this whole mess to a very large extent will be to ensure that debt financing and also extra revenues that have been raised into public expenditure are used in critical sector that can help us unlock productivity and revenue and effects are seen as quick as possible. Once we can begin to achieve that, it's a lot easier for us to service debt, repay back as much as we can, which also grows in the form of confidence within the ecosystem, as well as also grow our market capabilities to fund our developmental aspirations ourselves. So more money will be required to jumpstart the Nigerian economy, and part of sustainability becomes on, are we making enough and how do we expand the market to make enough so that that 75% give or take can shrink based off on, you know, increased revenue targets and all that. Okay, so just before we leave off this issue and talk about inflation in a moment, you talked about the new measures that the president has put in place in recent times. Now, but my question right now would be, how confident are you with the fact that and the last time assembly actually raised the limits of the ways and means and what implications are we going to be seeing anytime soon? Well, we're expecting that many of these policies, I mean the ways and means and all that, just don't forget that a lot of things are really developing stage. There's a new administration, you know, new set of lawmakers, you know, and to a very large extent, you know, what's the sustainability of our regulatory frameworks or legal framework, you know, to thrive, you know, beyond all of these economics of change that we find right now. All right, so that's very critical for us to achieve the goal of this bill or this act that has been designed or ruled out in the first place that any form of interruption on the execution process of it being the fact that government has changed hands, you have new people coming to the space and they still need to settle into the government. You know, we're still in the setting, we're not even up to 90 days yet. All right, so a lot bothers heavily at the risk of execution knowing fully how the Nigerian space, you know, thinks about policy, thinks about running out bills and act and thinks about those who would take those things and run with them. All right, so what's the economics of this change and how would it impact on the overall objective of these policies and acts that have been introduced? Let's not forget also, the president has also sought to change the board of many of the Parasitals right now in Nigeria, you know, and there are lots of Parasitals whose, whose, sorry, the success of this bill, you know, is largely dependent on, you know, the initial strength of these Parasitals. All right, so will he make or break, you know, the future of this policy in context to deliver his objective and these are the rising developing questions that we're in this stage in. So for now, it's a ticket of let's watch how the process evolves, who's executing what and to what extent we can really be stopped on the positive side of these bills, you know, going to market and helping us deliver on the objectives. All right, all right, it's still business insights on plus TV Africa, we still have gospel ability with us in the house. We'll take a very quick break and we'll be turning our attention to inflation in a moment to join us again.