Interest Rate, Naira Devaluation Will Affect Debt Servicing, OBG Warns | Independent Newspapers Limited
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Interest Rate, Naira Devaluation Will Affect Debt Servicing, OBG Warns

Posted: Jun 17, 2015 at 1:58 am   /   by   /   comments (0)

By Sola Alabadan,  Lagos


Oxford Business Group (OBG), a global publishing, research and consultancy firm, has warned that the recent benchmark interest rate hike by the Central Bank of Nigeria, to 13 percent and the devaluation of the naira, down by nearly 30 percent in just three months to $1:N198, are likely to affect debt servicing on loans denominated in foreign currency.

In its new report, OBG also insisted that the challenging times are not over just yet for Nigeria’s banks, saying the sector is facing structural changes that affect its traditional profitability drivers.

Tagged “The Report: Nigeria 2015”, OBG equally warned that “Nigeria’s youthful demographic profile could prove either a future economic asset or a significant social burden”.

“Given that 63 percent of the country’s 170 million people are under the age of 24, much will depend on the progress that can be made to improve the quality and capacity of its education system. Major improvements will be essential if the country is to fulfill its economic potential in the medium and long term,” the report said.

On issue of health, OBG said with almost half of all Nigerians living below the poverty line and facing the dual burden of a high incidence of both infectious and non-communicable diseases (NCDs), Nigeria’s under-funded public health system is under significant pressure.

It was added that there are also hurdles to overcome in ensuring that every Nigerian, irrespective of geography and income, has access to basic health services.

As Nigeria has become the largest telecoms market in Africa and the Middle East over the past decade, with more than 140 million active telecoms subscribers in 2015, according to the Nigerian Communications Commission (NCC), the report states that the telecoms sector will continue to expand.

With the world’s seventh-largest population, which continues to grow rapidly its current 170 million, OBG says agriculture is key part of Nigeria’s economy, noting that given the successes achieved so far, the agricultural sector is poised to reinforce its role as a key economic contributor.

Although oil has traditionally dominated Nigeria’s production mix, OBG affirms that natural gas looks set to gain more ground in the coming years due to increase in demand from the recently privatised electricity sector and investments by state-owned Nigerian National Petroleum Corporation (NNPC) in gas aggregation and transport infrastructure, which are strengthening supply links to power plants.