Nigeria's Domestic Debt Climbs to ₦80.49 Trillion with Unclaimed Funds Borrowing
The Federal Government of Nigeria has recorded a significant increase in its domestic debt, which now stands at ₦80.49 trillion. This rise follows a strategic borrowing of ₦100 billion from the Unclaimed Funds Trust Fund (UFTF), marking a notable shift toward unconventional domestic financing sources.
Details of the Debt Structure and Borrowing
According to the latest data from the Debt Management Office (DMO), the ₦100 billion sourced from unclaimed private assets represents approximately 0.12% of the total domestic debt. Despite its relatively small proportion, this move is symbolically significant as it integrates idle private money into the official public debt framework.
The domestic debt composition remains dominated by traditional instruments:
- FGN Bonds: ₦63.63 trillion, accounting for about 79% of the total.
- Treasury Bills: ₦13.85 trillion, making up around 17%.
- Promissory Notes: ₦1.54 trillion.
- Sukuk Bonds: ₦1.19 trillion.
Legal Framework and Management
This borrowing is authorized under the Finance Act 2020, which permits the DMO to invest dormant bank accounts and unclaimed dividends from the UFTF into government securities. The fund is managed collaboratively by the DMO, Central Bank of Nigeria, and the Securities and Exchange Commission.
It is important to note that the original owners of these unclaimed funds retain the right to reclaim their money, including any accrued returns, upon proper identification.
Implications and Broader Fiscal Context
The decision to tap into unclaimed funds reflects mounting pressure on government revenue, as authorities seek to fund budget deficits and mitigate risks associated with foreign exchange volatility. Nigeria continues to grapple with budget shortfalls, rising debt servicing costs, and weak revenue collection, prompting increased reliance on domestic borrowing.
Proponents argue that this approach productively utilizes dormant financial assets, while critics express concerns about the ethical use of private funds for public debt, transparency in management, and potential impacts on investor confidence.
Future Outlook
As Nigeria's domestic debt continues to escalate, stakeholders are closely monitoring the sustainability of this borrowing strategy, the transparency of the process, and whether the funds will be effectively deployed to stimulate economic growth rather than exacerbate existing fiscal challenges.
