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CBN Transitions to Inflation Targeting

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— Urges States to Adopt Fiscal Discipline

By Son Tertsea, Abuja

Even as more funds accrue to sub national governments for development, their reckless fiscal behaviour has intensified via excessive supplementary Budgets, unplanned spending, and unsustainable debt accumulation, prompting the Central Bank of Nigeria CBN to call them to order.

The CBN said this on Sunday through a statement following an engagement with sub-national stakeholders facilitated through the Nigerian Governors’ Forum Secretariat in Abuja.

According to the statement, the Deputy Governor in charge of the Economic Policy Directorate, Dr Muhammad Abdullahi, urged state governments to adopt stricter fiscal discipline to support price stability and ongoing macroeconomic reforms.

He urged “States to reduce reliance on overdrafts and short-term financing, ensure that borrowing decisions align with debt sustainability thresholds, improve budget realism and revenue forecasting, prioritise expenditure, and better synchronise fiscal calendars with prevailing macroeconomic conditions,” the statement said.

Abdullahi described the transition to inflation targeting as a shift towards a more transparent, rule-based, and forward-looking monetary framework that requires close collaboration between the central bank and state authorities.

According to him, while the CBN remains responsible for monetary policy decisions aimed at controlling inflation, fiscal actions by state governments also significantly influence inflation outcomes in a federal system like Nigeria’s.

He warned that inflation targeting largely depends on managing economic expectations, stressing that expansionary fiscal activities by states could weaken the effectiveness of monetary policy signals.

The deputy governor noted that, “In an inflation targeting regime, persistent, unpredictable or expansionary fiscal behaviour at the sub-national level can significantly undermine price stability,”

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He added that the absence of fiscal dominance, where governments pressure the central bank to monetise deficits, remains a major condition for successful inflation targeting, noting that the principle applies to both federal and state governments.

Abdullahi further
outlined four responsibilities expected of state governments under the inflation-targeting framework, including maintaining fiscal discipline and predictability, pursuing responsible borrowing, improving coordination on cash and debt management, and strengthening internally generated revenue mobilisation.

He warned that excessive supplementary budgets, unplanned spending, and unsustainable debt accumulation could trigger liquidity shocks and worsen inflationary pressures.

The deputy governor stressed that inflation targeting should be seen as a collective national commitment aimed at achieving long-term stability, economic credibility, and sustainable growth.

In his submission, the Director of the Monetary Policy Department, Dr Victor Oboh, said inflation targeting is a “win-win framework” capable of benefiting households, businesses, and governments by improving policy credibility and reducing macroeconomic uncertainty.

Oboh noted further that price stability could not be achieved through monetary policy alone, especially in a federal system where state spending, borrowing, and cash flow decisions directly affect inflation and liquidity conditions.

According to him, the engagement was organised to deepen collaboration and mutual understanding between the CBN and state governments regarding the expectations and coordination required for the successful implementation of inflation targeting.

In his goodwill messsge on behalf of the Director-General of the Nigerian Governors’ Forum, Dr Abdullateef Shittu, the Executive Director of Policy, Strategy and Research at the forum, Prof Olalekan Yunusa, commended the CBN for involving sub-national authorities early in the transition process.

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He said the move from monetary targeting to inflation targeting reflected a deliberate commitment to price stability, adding that sustainable macroeconomic stability required disciplined coordination across all tiers of government.

The engagement attracted participants from over 20 states, including commissioners of finance and economic planning, accountants-general, permanent secretaries, statisticians-general, and directors, who reaffirmed support for the CBN’s reform agenda and transition to inflation targeting.

Reports indicate that the 36 states and the Federal Capital Territory’s debt rose to nearly $5.7bn in fresh external loans in 2025, driving a year-on-year surge in subnational foreign debt despite higher inflows from Federation Account Allocation Committee disbursements.
Data from the Debt Management Office indicated that the combined external debt stock of the 36 states and the FCT increased from $4.80bn as of December 31, 2024, to $5.68bn as of December 31, 2025, reflecting a net increase of $884.66m, or 18.43 per cent year-on-year.
A breakdown of the data showed that 33 out of the 37 subnational entities recorded increases in their external debt positions during the period under review, representing 89.19 per cent of the total, while only four states posted declines, accounting for 10.81 per cent.
The scale of the increase shows a continued reliance on external financing by state governments amid fiscal pressures, infrastructure demands, and rising FAAC revenues.

Business and Economy

Financial Inclusion: Kwara Buys Dangote Refinery Shares For Female Teachers

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By Michael Lim

Kwara State Government has announced plans to buy shares in the Dangote Refinery Initial Public Offering (IPO) for female teachers in the state.

The plan is part of a new initiative to promote investment and financial inclusion among educators.

Governor AbdulRahman AbdulRazaq disclosed this on Monday in Ilorin while speaking at an event organised to mark the 2026 World Teachers’ Day.

The Governor also presented about N120 million in awards to outstanding teachers, head teachers, principals and schools.

The governor said the state would purchase 10,000 shares for 10 female teachers in each of the outstanding public schools.

He added that the scheme would also be extended to outstanding retired female teachers.

He said the initiative was being developed in partnership with the Dangote Foundation to encourage women to move beyond earning income to building assets through investment and share ownership.

“Dangote has created the Dangote Foundation, providing subscription grounds for women only. For every ten shares we purchase they will give a grant of another ten shares, making twenty shares,” AbdulRazaq said.

He added, “Our hardworking women teachers in TESCOM and SUBEB will get ten shares each. We will also extend it to the retired female teachers so that peace and prosperity will go round them.”

AbdulRazaq directed the Head of Service, Dr Olufunke Mercy Shittu, to work out modalities for capturing qualified retired female teachers under the initiative.

The governor said the investment programme was part of wider efforts to improve the welfare and economic opportunities available to teachers in the state.

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He said his administration would continue to prioritise teachers because of their central role in determining the quality of education and, ultimately, the future of the state.

“We will continue to do our part, including improving your welfare and working conditions on a sustainable basis. We are confident that you and other stakeholders will always do your part,” he said.

The governor also presented financial awards totalling about N120 million to outstanding education stakeholders across different categories.

While 29 best principals and head teachers received N29 million, 119 outstanding teachers received N59.5 million.

Eleven serving and retired university dons were presented with N22 million under the Pioneer Professorship Recognition Awards, while three schools received N9 million for the Best Kept School Award.

AbdulRazaq said the recognition was designed to reward sacrifice and motivate educators to sustain their contributions to the state’s education system.

He said the administration’s education reforms had focused on improving both the quality of teaching and learning, citing merit-based recruitment, continuous professional development, improved school infrastructure and the use of technology and data through KwaraLEARN.

The governor also highlighted the regular promotion of teachers and implementation of the 27.5 per cent Teachers’ Specific Allowance as measures aimed at improving their welfare.

According to him, the interventions were yielding results, particularly in the performance of Kwara pupils at national and international competitions.

The Chairman of the State Universal Basic Education Board (SUBEB), Prof Sheu Raheem Adaramaja, announced that the 2026 promotion exercise for eligible teachers had been approved by the state government.

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Adaramaja said the promotion examination would hold on October 10, adding that Kwara would be the first state in the federation to conduct its 2026 promotion exercise for eligible teachers.

Commissioner for Education and Human Capital Development, Dr Lawal Olohungbebe, said the award programme demonstrated that hard work deserved recognition.

He urged the awardees to sustain their performance and encouraged teachers across the state to continue developing themselves professionally.

The former Kwara State Chairman of the Nigeria Labour Congress (NLC) and keynote speaker, Comrade Umar Farooq, said supporting teachers should be regarded as an investment in children, communities and society.

The state Chairman of the Nigeria Union of Teachers (NUT), Comrade Yusuf Wahab Agboola, thanked the government for its interventions in school infrastructure and teachers’ welfare, while urging it to adopt the national harmonised retirement age for teachers.

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Business and Economy

29 years after:Unimaid Business management class of 97 holds reunion

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*Plans intervention or games for young entrepreneurs
By Aliyu Musa

THE University of Maiduguri business management class of 1997 at its first reunion in Abuja emphasized the need to support young entrepreneurs and provide them the necessary support such that they can contribute to the micro economic growth and eliminate devices that falls below acceptable moral and legal standards.

The class of 97 also agreed to constitute an investment committee that will assist the forum pursue its goals ahead of its proposed 30th anniversary slatted for 2027.

Former deputy speaker of the House of Representatives,Honourable Babangida Nguroje who also spoke at the reunion called on his course mates to deploy their professional strength in ways that will strengthen the nation’s economy , give back to their university and groom upcoming entrepreneurs through trainings and offer opportunities for them to grow .

Honourable Nguroje emphasized the need to boost the micro economy of Nigeria through investments that will further create jobs for the teeming youths and grow the country’s domestic growth .

According to him ,”It is my honour to be in your midst this evening and a rare opportunity for all of us to be united again after several years.

“It is particularly important that this union is coming at a time that this country needs our expertise as students of figures ,data and research .

“This is out first reunion and I am glad that we have developed in our individual capacities and areas of interests .

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“Much as we are here basically to catch up again , it is important that discourse matters that will send out footprints in our university by identifying areas we can assist our university , particularly our department .

“We must also look at ways of making this gathering annually and how best we can lift those in need and create opportunities for all of us .”

One of the organizers of the reunion Mrs Julianna Aiwerioghene said the class of 97 will take seriously the issues of empowerment and as managers ,it will be interested in grooming younger business owners to again their full potentials .

“We will be interested in harnessing their capabilities and help them build themselves through trainings and other forms of support .

“We want to see a productive generation for the younger ones and we will be subsequently looking at helping each other and continually look at how we will remain united and grow together. Progress is what we take seriously and we will also not forget out university in the process .”

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Nigerian Economy at Risk: 22 Firms Threatened by N3.9trn Debt

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–Job losses loom

A wide disparity in the ability of companies listed on the Nigerian Exchange Limited, NGX, to cover their debt obligations with cash has emerged, with some companies holding several times more cash than debt, while others have cash covering only a fraction of their outstanding borrowings.

Analysts noted that the cash/debt position of some of the listed companies could affect investment, employment, production and capital-market development.

The available data obtained by Vanguard, covering 40 companies in the second quarter of 2026, showed a combined total debt of N3.9 trillion, out of which 18 firms have cash/debt ratios of at least 1.0 times, indicating that their cash holdings are equal to or greater than their total debt, while 22 companies have ratios below 1.0 times, meaning their total debt exceeds cash on hand.

The cash/debt ratio measures a company’s ability to meet its debt obligations using cash available to it. A ratio above 1.0 times generally indicates that a company has sufficient cash to cover its total debt, although the ratio does not, on its own, measure overall financial strength or debt-servicing capacity.

Cash/debt analysis

On the table of the cash/debt analysis, HBM Nigeria led, with a cash/debt ratio of 319.07 times, based on cash of N393.68 billion and total debt of N1.23 billion.

It was followed by UPDC Real Estate Investment Trust, with 283.73 times, from cash of N7.15 billion against debt of only N25.2 million, while eTranzact International recorded 214.89 times, with N23.69 billion cash and N110.24 million debt.

CWG also recorded a high ratio of 211.1 times, with cash of N7.4 billion compared with total debt of N35.06 million.

Other companies with substantial cash coverage included Unilever Nigeria, with a ratio of 44.8 times; Berger Paints, 18.4 times; Industrial & Medical Gases, 13.56 times; and NASCON Allied Industries, 12.72 times.

Companies with stronger cash cover

The available data, as gathered by Vanguard, also showed that several major companies had cash exceeding their debt.

Vitafoam Nigeria recorded 5.88 times, while UPDC posted 5.47 times. International Breweries had 3.34 times, Sterling Financial Holdings 3.08 times and May & Baker Nigeria 2.83 times.

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Livestock Feeds recorded 1.94 times, Julius Berger Nigeria 1.85 times, Chams Holdings 1.65 times and Dangote Cement 1.31 times. Skyway Aviation recorded 1.19 times.

The figures suggest that these companies have, based purely on cash on hand relative to total debt, a degree of liquidity protection against debt obligations.

However, analysts caution that a high cash/debt ratio should not automatically be interpreted as evidence that a company is more profitable or efficiently managed.

Debt exceeds cash in 22 companies

On the other hand, Aradel Holdings recorded a cash/debt ratio of 0.96 times, with cash of N1.77 trillion against total debt of N1.84 trillion.

Ellah Lakes recorded 0.81 time, John Holt 0.77 times, Academy Press 0.72 times and Eterna 0.69 times. ABC Transport had 0.58 times, while Cadbury Nigeria and Fidson each recorded 0.53 times.

The ratio fell further among BUA Cement, at 0.46 times; BUA Foods, 0.44 time; Beta Glass, 0.34 time; Conoil, 0.20 times; Guinness Nigeria, 0.16 times; and Champion Breweries, 0.16 times.

DAAR Communications recorded 0.14 time, while Cutix and Japaul Gold & Ventures each recorded 0.11 times.

Geregu Power had 0.09 times, FTN Cocoa Processors 0.08 times, C & I Leasing 0.07 time, Chellarams 0.05 times and Caverton Offshore Support Group the lowest at 0.03 times.

This means, for example, that Caverton’s N2.46 billion cash position represents only a small fraction of its N87.15 billion total debt, while Chellarams had N235.16 million cash against N5.12 billion debt.

Implications for companies

Market analysts said the cash/debt ratio provides investors with an important indication of the liquidity pressure facing companies, particularly in an environment where the cost of borrowing remains significant.

They noted that companies with ratios substantially above 1.0 time have greater cash buffers with which to meet debt obligations, fund working capital and withstand temporary disruptions in revenue.

However, they said excessive cash holdings could also raise questions about whether funds are being deployed productively.

According to the analysts, a very high cash/debt ratio may be positive from a liquidity perspective, but investors should examine why the company is holding so much cash instead of investing it in productive assets, expanding operations, reducing debt or returning capital to shareholders.

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For companies with ratios below 1.0 time, the concern is different. A low ratio does not necessarily mean that a company is in financial distress because businesses generate operating cash flows and may have access to undrawn credit facilities and other sources of liquidity.

Nevertheless, analysts said a persistently low ratio could expose companies to refinancing and interest-rate risks, particularly where debt repayments fall due before sufficient operating cash is generated.

Implications for shareholders

For shareholders, the ratio has implications for both risk and returns.

Companies with relatively strong cash positions may have greater flexibility to service debt, maintain operations during difficult periods and finance expansion without immediately resorting to additional borrowing or equity dilution.

On the other hand, companies with low cash/debt ratios may face higher financial risk if earnings or operating cash flows weaken.

Analysts, however, stressed that shareholders should not make investment decisions based solely on the ratio.

They said investors should consider profitability, operating cash flow, interest expenses, debt maturity profile, working-capital requirements, asset quality and management’s capital-allocation strategy alongside the cash/debt position.

Implications for Nigerian economy

At the broader economic level, analysts said the cash/debt position of listed companies could affect investment, employment, production and capital-market development.

Companies carrying heavy debt burdens may devote a larger proportion of their earnings to interest and principal repayments rather than expansion, technology, employment and dividend payments.

Where debt is used productively, however, leverage can support expansion and increase productive capacity.

The implication, analysts said, is that the quality and use of debt matter as much as the amount of debt itself.

A company with a low cash/debt ratio but strong and predictable operating cash flow may be able to manage its obligations effectively, while a company with a high cash/debt ratio but weak operations could still face business challenges.

For the Nigerian economy, the ability of listed companies to maintain adequate liquidity is therefore important because financially stable businesses are better positioned to sustain production, employment, tax payments and investment.

Cash/debt ratio not a standalone measure

Analysts therefore advised investors to treat the cash/debt ratio as one component of a wider financial-health assessment.

The data shows a clear divide: while some NGX-listed companies have cash positions several times larger than their debt, others have debt that is many multiples of their available cash.

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The difference highlights the varying approaches of companies to borrowing, liquidity management and capital allocation and provides investors with an additional indicator for assessing financial risk.

Analysts’ comments

Ambrose Omordion, Chief Operating Officer, InvestData Consulting Limited, said investors should not assess debt in isolation but should examine earnings, cash flow, interest-cover ratios and the maturity profile of borrowings.

He said a high level of debt could magnify shareholder returns when borrowed funds are invested in profitable projects, but could also magnify losses when earnings and cash flows weaken.

The same principle applies to the cash-to-debt ratio.

A company with a low ratio but strong and predictable operating cash flow may remain financially stable, while a company with a high ratio but weak operations may face longer-term challenges if its cash balance is not being replenished.

Impact on companies

For the companies themselves, high cash cover provides an important cushion in an environment of elevated interest rates.

Companies that need to refinance maturing loans may face higher finance costs when new loans are contracted. Those with significant cash can repay some debt, negotiate from a stronger position with lenders or fund part of their capital expenditure internally.

This could reduce finance costs and improve profitability.

Commenting on the ratios, economic and communications expert, Clifford Egbomeade, said: “The interpretation of cash and debt should go beyond the ratio itself,” stressing that investors should examine the quality and utilisation of the cash.

According to him: “A company with substantial cash and low debt has greater flexibility to respond to economic shocks, finance expansion or take advantage of investment opportunities without immediately resorting to expensive borrowing.

“This is particularly relevant in Nigeria where corporate borrowing costs remain relatively high.

“Some companies deliberately retain cash to finance inventories, capital expenditure, acquisitions, dividend payments and other strategic commitments.

“In addition, cash and cash equivalents may include restricted funds or short-term investments that cannot necessarily be deployed immediately.

“This means that shareholders should examine the composition of cash before drawing conclusions about a company’s liquidity.”

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