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According to Telecommunications Sector Data for the second quarter (Q2) of 2022, released by the National Bureau of Statistics (NBS), Nigeria's telecoms sector experienced a growth in both voice and internet subscriptions.³ The total number of active voice subscribers in Q2 2022 was 206.4 million, representing a 10.04 percent increase from 187.6 million subscribers in Q2 2021. Similarly, in terms of internet subscriptions, 151.3 million subscribers were recorded in Q2 2022, from the 140.2 million reported in Q2 2021. This indicates a growth rate of 7.96 percent on a year-on-year basis. An increase in active voice and internet subscribers will likely lead to increased transactions through digital platforms. In addition, the growth in subscribers suggests that for businesses, having an online presence is an excellent strategy to expand the reach of their products. In other words, businesses are no longer limited to physical stores alone. The increase in the number of subscribers also indicates that the digital economy's contribution to the overall economy will continue to increase over the next few years. A way for the government to support the expansion of the digital economy is to address the issue of unreliable electricity supply. The unstable electricity supply makes network providers rely primarily on generators to power their equipment, thereby increasing their operating costs and the cost of doing business via the internet.

The original Industrial Revolution was powered by steam; the second by electricity. The rise of digitisation and automation generally defined the Third Industrial Revolution, which was largely powered by oil. Today, we find ourselves in the Fourth Industrial Revolution (4IR), which is largely powered and characterised by data. It can hardly be contested that data is central to today’s global economy in ways which it never has been before. Data flows across borders far more frequently than at any other point in time. Most importantly, these flows are creating or have created immense value (at least on aggregate) and are, therefore, central to businesses and business practices. They have fundamentally changed what and how much is traded, as well as with whom and how trade is conducted. Put differently, cross-border data flows have increased the scope, scale, and speed of trade.

Data from the Central bank of Nigeria (CBN) shows that Nigeria's external reserves dropped to $37.9 billion as of Wednesday, October 12, 2022, from $38.8 billion on September 12 2022.¹ The decline is due to CBN's continuous intervention in the exchange rate market and dwindling export earnings. There has been an increase in the demand for foreign exchange for importing inputs and finished products. Likewise, there has been a rise in the number of Nigerians moving to other countries for studies and work. These result in a demand-supply deficit pushing the exchange rate to an all-time high at different windows. The CBN has been intervening to minimise the rate of increase, leading to a trend of steady declines in foreign reserves since the beginning of September 2022. While it is prudent to intervene by pumping more forex from the external reserve, it is also essential, for sustainability, that government strive to boost export earnings to ensure more accretion into the reserve. As a result, the government needs to strengthen reforms to increase non-oil exporting firms' productivity and competitiveness in the international market.

The Organization of Petroleum Exporting Countries (OPEC), alongside OPEC+, cut crude oil output by two million barrels per day (mb/d) to achieve market stability². As a result, Nigeria’s oil output quota for November 2022 was reduced by 4.6 percent from 1.826 mb/d in August 2022 to 1.742 mb/d. This measure comes following the downward movement in crude oil prices. This cut follows several consecutive months of an increase in Nigeria’s oil output quota, which the country has continuously failed to meet due to vandalism, oil theft, low investment, and ageing infrastructure. The failure of the country to meet the OPEC quota also suggests the country had benefited little from the increase in global crude oil prices in the first half of the year. Without significant improvement in domestic production, there is a high likelihood that the production level would still be lower than the new quota level. Hence, there is a need to address structural factors such as insecurity that have contributed partly to the country’s low crude oil production. The Nigerian National Petroleum Company (NNPC) Limited needs to develop a roadmap to improve the security around the pipelines to tackle vandals, prevent oil bunkering, and attract investment into the industry.

Following its 287th meeting on the 26th and 27th of September 2022, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) raised the monetary policy rate (MPR) by 150 basis points from 14 percent to 15.5 percent.¹ Making it the third successive increase on the MPR in 2022 to rein in inflation. In addition, the Cash Reserve Requirement (CRR) was increased by 500 basis points from 27.5 percent to 32.5 percent. However, the Liquidity Ratio (LR) and the asymmetric corridor were retained at 30 percent and +100/-700, respectively. The increases in MPR and CRR will likely reduce the economy's liquidity and volume of money. However, the last two increments in MPR had minimal effect on the money supply. The money supply reduced from N48.9 trillion in June to N48.3 trillion in July. However, the declining trend in money supply was not interrupted, as it rose to N49.3 trillion² in August 2022, suggesting that the previous increment in MPR had weak effect on the money supply. The weak response of the money supply to changes in MPR indicates that taming the inflation rate through money supply might yield a limited impact. However, it is essential to note that excess liquidity might not be Nigeria's sole driver of inflation. Rising energy and food prices contribute partly to the soaring headline inflation. There is a need for complementary fiscal policies that would reduce the cost of production and boost domestic production. And reduce the pace of price increases and tame inflation.

In August 2022, the total net domestic credit was N61.2 trillion, increasing by 33 percent from 46 trillion in August 2021.² Net domestic credit comprises credit to the government and credit to the private sector. About two-thirds of the credit went to the private sector and the remaining to the government. In August, the total credit to the private sector rose to N40.2 trillion from N33.4 trillion in August 2021, suggesting an increase of 20.2 percent. Similarly, credit to the government rose to N33.4 trillion from N12.6 trillion, indicating an increase of 67.1 percent. The analysis shows that credit to the government grew at a faster rate compared to credit to the private sector. The growth in credit to the government is primarily due to low revenue mobilization. Consequently, the government needs to boost its revenue base to reduce its fiscal deficit and the size of loan requests from the domestic financial market. In addition, the fast growth in credit to the government is likely to crowd out credit available to the private sector. Furthermore, adequate provisions should be made to strengthen the debt management process to reduce the misappropriation of credit to the government. This can be achieved by introducing mechanisms that would promote efficient and transparent use of credit obtained by the government.

According to the National Bureau of Statistics (NBS), the prices of energy products increased further in August. The average retail price of a litre of petrol increased by 14.89 percent to N189.46 in August 2022 from N164.91 in August 2021.¹ The price of a 5kg Cylinder of Cooking gas rose by 101.17 percent to N4,397.68 in August 2022 from N 2,215.33 in August 2021². For household kerosene, the price of a litre of the product rose by 102.38 percent from N400.01 in August 2021 to N809.52³. The price of a litre of diesel rose by 209.54 percent to N786.88 from N254.21 in August 2021⁴. These increases are partly due to (i) the spike in crude oil price affecting the prices of its refined products, and (ii) exchange rate depreciation. The rate of increase was higher because the refined crude oil products were imported. High energy prices contribute partly to the country’s rising headline inflation by increasing the input costs and overall cost of production. Hence, there is a need for the government to initiate policies that can limit the rate of price increases. Fixing existing refineries and introducing incentives to attract investors to invest in modular refineries will likely boost domestic production of refined crude oil products and eliminate increases in energy prices associated with the importation of the products.

The debt situation in many low-income countries (LICs) following the COVID-19 pandemic has deteriorated considerably. While many LICs had participated in the G20’s Debt Service Suspension Initiative (DSSI) by April 2022, only three countries have taken part in the Common Framework for Debt Treatment beyond DSSI. To better operationalise the Common Framework, the G20 should incentivise private and public creditor participation including those of Non-Paris Club members. In addition, G20 members should encourage the application of the comparability of treatment clause and urge multilateral creditors to participate in the debt restructuring process. The G20 should encourage full disclosure of debt among creditors by promoting the OECD Debt Transparency Initiative and by adopting the G20 Operational Guidelines. Moreover, the G20 should support local capacity building for public financial management in LICs and should promote that debt treatment under the Common Framework is subject to scaling up sustainable investments in debtor countries. Finally, the G20 should use its weight in the managing boards of the international financial institutions to push IMF-WB debt sustainability analyses to better include sustainability criteria.

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The pandemic has taken a heavy toll on the global economy. The sources of economic growth and productivity gains have been constrained, and poverty and inequality have risen sharply. In addition, fiscal space has been severely educed and public debt levels have risen at an unprecedented speed. To accelerate the recovery from COVID-19 and make it more sustainable, it is urgent to reconsider debt-restructuring strategies.

This policy brief describes the pitfalls in current approaches to debt restructuring for assessing sustainability in low and lower-middle income countries, proposes a reframing of debt sustainability analysis to take into account social and environmental sustainability and provides concrete examples of initiatives based on the experiences and challenges of the developing world.

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