Two developments struck me as outstanding events of the year 2024. One is a positive development while the other is negative and prohibitively repugnant.
The first development that I consider as outstanding is the overwhelming response of investors to the $2.2 billion Euro Bond that the federal government floated in the dying days of November 2024.
The bond triggered a level of subscription that shocked the world. The federal government floated a bond of $2.2 billion but investors responded with a subscription of $11.2 billion. That was a record oversubscription of $9 billion.
There are various reasons for the overwhelming subscription to the bond. The first reason is the liquidity level of the international money market at the time the bond was floated. The international money market was very liquid at the time the bond was floated. Consequently, everyone scrambled to subscribe.
The second reason is the rate at which the bond was offered. The federal government floated the bond at a rate of 10 per cent. That was luring enough to attract even the stingiest investor. However, that is the lowest rate at which Nigeria can sell a bond to the international community. Even as it has never defaulted in its loan service commitments, rating firms rank Nigeria as a high risk borrower.
If the United States of America (USA), Canada or any strong member of the European Union (EU) were to float that bond the highest rate will be 2 per cent. That is because those countries are regarded by rating agencies and foreign investors as low risk borrowers.
In fact, some investors mistake U.S. lending instruments for risk-free instruments. They are willing to invest in them at the lowest yield because its risk is either non-existent or very low.
The third reason for the outstanding performance of the bond is the perception of Nigeria by the international money market and by extension the global community of foreign investors.
The international money market sees Nigeria as a reliable borrower with a bankable reputation. That perception emanates from the fact that even as Nigeria is battling the excruciating pains of managing a burdensome debt service that gulps down something close to 70 per cent of its lean revenue, Africa’s most populous country has never defaulted in its domestic or external loans service commitments.
That is something that keeps Nigeria out of the reprehensible club of loan service defaulters which Ghana, Nigeria’s neighbour to the west, intrinsically belongs to.
In 2023, Ghana defaulted in its Euro Bond commitment and plunged investors into massive losses. Guarantee Trust Bank (GTB), a leading firm in Nigeria’s banking industry, lost N35 billion to Ghana’s loan service default. Nigeria has never plunged investors into such agony.
In the last four years Ghana had taken the shine from Nigeria in terms of foreign direct investments. Foreign direct investors saw Ghana as mustering one of the most efficient public power supplies on the Dark Continent and dumped Nigeria for the Black Star. Ghana was consequently attracting more foreign direct investments than Nigeria.
That has changed. Ghana’s economy is bleeding and crumbling under the crushing weight of a debt burden standing menacingly at 92 per cent gross domestic product (GDP). Nigeria’s debt is a seemingly comfortable 52 per cent of GDP. That makes it considerably easier for Nigeria to service its debt even with lean revenue.
One source puts Ghana’s inflation rate at 50.2 per cent. That is a crushing burden to consumers as inflation, their invisible enemy, depletes the cedi’s purchasing power and pushes millions below poverty line.
The level of subscription in the last Euro Bond floated by the federal government suggests that Nigeria is now the darling of foreign investors, many of whom are fleeing Ghana the way they fled Nigeria four years ago.
Even as Nigerians are groaning over the removal of petrol subsidy as they are not akin to four digit petrol pump prices, the situation in Nigeria remains light years away from the torment at the petrol retail outlets in Ghana.
The pump price of petrol in Nigeria has dropped to N975 per litre in some retail outlets. The cheapest pump price of petrol in Ghana is N1, 645 per litre. There is no basis for comparison between the two countries.
The other development that struck me as an outstanding event of 2024 is the spiraling price of rice, a staple food in Nigeria. The year 2024 will go down in history as the year when millions of Nigerians watched helplessly as the price of rice rose beyond their reach.
That was the year that inflation, consumers’ invisible enemy, mercilessly depleted the purchasing power of the naira and pushed the price of a 50kg bag of Nigerian rice to N123, 100.
The 140 million Nigerians toiling below poverty line could no longer afford rice. Archbishop Ignatius Kaigama of the Catholic Diocese of Abuja lamented last week that most of the deprived Nigerians now rely on the church to provide them with basic needs like food.
The evil hands of inflation could directly be seen in the avoidable death of 70 impoverished Nigerians who died two weeks ago in the stampede at the scenes where they went to collect the food items they could no longer afford because of the evil manipulations of inflation.
Those deaths are simply unacceptable in a nation with abundant resources as Nigeria is blessed with. The federal government must confront inflation with the deadliest weapon in its arsenal. The time has come when we must abandon the intractable theory of market forces fixing prices of commodities. We need functional price control structures to clip the wings of those fueling inflation arbitrarily.
Government must tame retailers, greedy unionists in the markets along with the devilish men in the National Union of Road Transport Workers (NURTW).
The three groups are directly responsible for 70 per cent of the inflation in Nigeria. They helped inflation to make 2024 a nightmarish year for millions of Nigerians.
