Issues
Improved Transparency Earns Rivers ‘B’ Rating With Stable Outlook
Public finances in the Nigerian state of Rivers are characterised by low availability of financial information by international standards.
The state has strong cash holdings, a favorable financing system, and very low debt.
We have assigned a ‘B’ long-term rating to Rivers.
The stable outlook reflects our forecasts for oil prices and production and expected efforts to modernise public finances.
Rating Action
On Nov. 10, 2009, Standard & Poor’s Ratings Services assigned its ‘B’ long-term issuer credit rating to the Nigerian State of Rivers. At the same time, Standard & Poor’s assigned its ‘ngBBB’ Nigeria national scale rating.
The outlook is stable.
This is Standard & Poor’s first rating on a Nigerian regional government.
Rationale
The ratings on the Nigerian State of Rivers are based on the state’s very low-though improving—information quality and disclosure by international standards and weak public finance system, which hinders management capabilities. Additionally, expenditure flexibility is limited because of large development needs that entail capital investment pressure. Also, Rivers has high exposure to oil revenues, which are expected to decline substantially during 2009-2010 compared with 2008.
Positive factors in terms of credit quality are the state’s currently strong cash holdings, low debt, and very healthy operating balance which derives from favourable revenue arrangements allocating a substantial share of the country’s oil revenues to Rivers. The ratings also reflect the government’s commitment to modernise public finances.
The Nigerian public finance system is undergoing reforms in several areas, including transparency, debt management, and fiscal rules. Concerning transparency and disclosure, Rivers comes from a low starting point. The government is, however, taking steps to modernise public sector administration, including a substantial information technologies (IT) upgrade, Standard & Poor’s | RatingsDirect on the Global Credit Portal.
November 10, 2009 and a move toward greater accountability and transparency. Notwithstanding the current weakness of the system, Standard & Poor’s views this ongoing modernisation as a key element of Rivers’ credit profile. If this process were to lose steam, a downgrade would result.
Based on the 2007 and 2008 accounts provided by the state, Rivers posted an excellent budgetary performance in these two years (the after-capex surplus was 22% of total revenues), on the back of buoyant oil prices. This allowed for strong cash accumulation and permitted an ambitious capex effort totalling Nigerian naira (NGN)225 billion (a very high 79% of 2008 estimated total expenditure) without any need to tap the financial markets. We understand that the government is inclined to maintain capex at NGN200 billion, while we forecast that Rivers’ annual oil revenues might be 40% lower on average during the period 2009-2011 with respect to its peak in 2008, largely as a result of lower oil prices and ongoing civil conflicts in the Niger Delta region.
However, we anticipate that Rivers will be able to maintain capex without tapping the financial markets, owing to a boost in internally generated revenue (thanks to the outsourcing of revenue collection with Skye Bank PLC [not rated]) and the use of the state’s large cash holdings (based on information we received, the state had some NGN95 billion at the beginning of November and, according to our forecast, we expect it to have around NGN90 billion at year-end 2009).
Rivers receives oil revenue windfalls from the excess crude account (ECA), although the amount is currently uncertain and subject to oil price volatility. We thus assume that ECA windfalls will gradually decrease in the coming years.
A very substantial part of Nigeria’s natural gas deposits and, to a smaller extent, crude oil production, are located in Rivers. Major operators in the state include the main multinational oil companies, which are accompanied by a cluster of private local companies. Although periodic episodes of violence in the Niger Delta can temporarily affect GDP growth and/or relocate economic activities, oil-related activities bolster sustainable employment in the long run—as evidenced by per capita GDP that is triple the domestic average—and, thus, form a relatively solid tax base.
While our issuer credit rating on Rivers is ‘B’, we would not automatically assign the same rating to Rivers’ debt issuances. Specifically, some types of debt issues could contain structural features that enhance credit quality—for example, an irrevocable standing payment order that authorises the federal government to deduct debt service payments at source from the statutory allocation. In these cases, Standard & Poor’s may analyze the transaction
structure and assign a rating that is different to the issuer credit rating.
Liquidity
At present, Rivers enjoys a very comfortable liquidity position: It has
NGN86.6 billion in local currency and $66 million in U.S. dollars as November 2009, mainly deposited in the First Bank of Nigeria PLC Cash holdings might decrease substantially in the next few years due to the maintenance of strong capex combined with lower oil revenues. In our central scenario (where annual capex does not go above NGN200 billion and accumulated after-capex deficits amount to NGN25 billion in the period (2009-2011), the state’s liquidity should remain above NGN 50 billion at year-end 2011. We understand that Rivers faces no debt repayment in 2010, except for some deductions at source from the Federation account in respect of a NGN3.8 billion foreign loan outstanding at year-end 2008.
Outlook
Our stable outlook is based on Standard & Poor’s current macroeconomic forecast for Nigeria, including oil and gas prices and production. We also assume that revenue collection—contracted to a local bank—will steadily generate around NGN90 billion annually in the coming years. Based on these assumptions, we expect Rivers to continue to generate large operating revenues, which in turn should enable it to carry out some NGN200 billion in annual investments in the period 2009-2011.
In the coming three years, Rivers’ self-financing capacity will also depend on ECA windfalls, whose predictability is low. Consequently, the stable outlook factors in our expectation that Rivers will lower capex if ECA windfalls decline substantially, so as to avoid debt accumulation.
The stable outlook is also based on the state government’s commitment to pursue the main ongoing IT developments, and particularly the full deployment of properly functioning budgetary, accounting, and financial modules. That is, we expect Rivers to disclose sufficient information for a timely and comprehensive assessment and forecast of its budgetary performance and liquidity.
A downgrade could occur if we view that capex efforts are likely to lead to a rapid debt accumulation or if ongoing reforms—particularly regarding transparency and disclosure—lose momentum. Conversely, an upgrade would result if the debt burden remains very low, liquidity is ample, and ongoing reforms yield substantive results.
As part of our surveillance activity, we will periodically request information to assess progress regarding the state’s financial management.
Issues
Wike: Destroying Rivers State And PDP
This is an open letter to the Minister of the Federal Capital Territory, Chief Nyesom Wike.
Your Excellency,
Sir, ordinarily, I would not be writing an open letter to you, but like a wise man once said, “Silence would be Treason.” So I prefer to stay alive than face the consequences of silence in the face of crime. With each passing day, and as the socio-political tides continue to turn, it has become more pertinent that more people speak up in a concerted MANNER to prevent the death of our party, the Peoples Democratic Party (PDP), as we appear to be, in the words of W. B. Yeats, “turning and turning in the widening gyre” heading for an end where the falcon will no longer hear the falconer
It is unfortunate that since losing control of the Federal Government, with the loss of President Goodluck Jonathan at the poll in 2015, our party, the Peoples Democratic Party (PDP), has continued on a downward spiral. It is much more painful, that where it is expected that leaders within the party should rise to the challenge and put an end to this decline of our great party, some have instead taken up roles as its undertaker.
It will be hypocritical to claim aloofness to what I believe is your grouse with the PDP and I am not a hypocrite. It will be uncharitable on my part to discountenance the role you have played in strengthening the PDP from 2015 up until the last Presidential primaries of the party. It is my belief that your grouse against certain members of the party who you perceived worked against the party and abandoned it in 2015 and then came around much later to take control of the party, is justified. Also know that your decision to remain in the Party and stifle its progress on the other hand, as a sort of payback, stands condemned. For a man of your pedigree and stature, it is a dishonorable act, highly dishonorable and stands as testimony against all you claim to stand for.
At least, it can be argued that those who you hold this grudge against, abandoned the party completely and did not sit back while actively working to destroy it from within. But what then can be the argument on your own part, seeing that those you are currently working with against your party are the same people who set in motion, and executed surgically, the plans that not only ended our Party’s leadership at the centre, but ended up dislodging the first Niger Deltan to occupy Aso Rock as Commander in Chief of the Armed Forces. Is this not akin to “cutting off one’s nose to spite one’s face?” That will be worse than folly. Let us not throw away the baby with the bath water because we do not like the soap used in bathing the baby. It will be a grave mistake.
Honourable Minister, sir, it is rather unfortunate that of all people, you have also decided to play the role of an undertaker not only for our party, but for our dear Rivers State.
I will like to take you down memory lane a little. Let me remind you of your emergence as Guber candidate of the PDP in Rivers State, against all fairness and justice in 2014. You will remember that despite the reality being that you as an Ikwerre man was poised to replace a fellow Ikwerre man in Governor Chibuike Rotimi Amaechi in our multiethnic state, Rivers people overwhelmingly stood by you and pushed for your emergence as Executive Governor of Rivers State in 2015. I dare say that your popularity in the entire Niger Delta region was at an all-time high at this point.
I want you to understand why you were loved across board leading to your eventual emergence as Governor of Rivers State in 2015; it was because when it looked like all were against the second term ambitions of the first Niger Delta man to emerge as President of Nigeria, you became not just a pillar but a beacon of resistance by standing for Goodluck Jonathan. Rivers people, as grateful and rewarding as they can be, paid you back by ensuring your electoral victory against the incumbent All Progressives Congress (APC) led by your predecessor. On your emergence, where there were second term Governors in the region, you, a first term Governor, was seen by the people as not just the leader of the PDP, but the leader of the entire Niger Delta region. You earned it, and no one could dispute it.
In 2019, when your re-election bid was being challenged ferociously, Rivers people once again stood solidly behind you. Many were killed in the process of defending your votes. Do you remember Dr. Ferry Gberegbe that was shot and killed while trying to protect your votes in Khana Local Government Area? There are many more unnamed and unrecognised sons and daughters of Rivers State who sacrificed their lives so that you could emerge as a second term Governor of Rivers State.
In 2022/23, Honourable Minister, you oversaw a party primary across board that saw some candidates imprisoned and internal party democracy jettisoned for your wishes, leading to the emergence of flag bearers of our party all singlehandedly picked by you. You have on more than one occasion publicly stated that you paid for all their forms. Even those shortchanged in this process licked their wounds and continued to play their roles as party members to ensure the success of the party at all levels. In what will go down as one of the most keenly contested elections in recent Rivers history, with formidable candidates like Senator Magnus Abe of the Social Democratic Party (SDP), Mr Tonye Cole of the All Progressives Congress (APC), and the vibrant youth driven Labour Party (LP), PDP emerged victorious across board except for Phalga Constituency 1 that was lost to the Labour Party. (Not that you did not loose in some other LGA’s but let’s stick to the official figures declared by INEC).
It begs the question, why then do you want to burn down Rivers State, when everyone who now holds political office emerged through a process designed and endorsed by you? Is it that you do not care about Rivers people and you are all about yourself? If so, I am forced to believe that those around you are not telling you the truth. The truth being that in a state where your words were law; where houses and businesses could be demolished or closed down without any recourse to legalities, where Executive Orders could be deployed to stifle the opposition, that your popularity is now at an all-time low. Probably because they are afraid of you, or of losing the benefits they gain from you, they fail to tell you that what you might perceive as a battle against your successor, has slowly but gradually degenerating into a battle against Rivers State and Rivers people. You know, there is a popular saying that, a man can cook for the community and the community will finish the food, but when a community decides to cook for one man, the reverse is the case.
LEAVE FUBARA ALONE
You have gone on and on about being betrayed by Governor Siminalayi Fubara. You point fingers forgetting that some of those same fingers quick to spot betrayals point straight back at you. It is not Governor Fubara that has betrayed the PDP by working against it in the just concluded General Election, and working with the opposition at the State and Federal level to destabilise the party. It is you, Honourable Minister. It is not Governor Fubara that betrayed Rivers people by instigating a political crisis with propensity to escalate ethnic tensions in Rivers State. It is you Honourable Minister. It is not Governor Fubara that has declared himself God over all in Rivers State and has no qualms with burning the state to the ground to prove a point. It is you Honourable Minister. It is you Honourable Minister who told the world that the APC was a cancer and you can never support a cancerous party. It is you Honourable Minister who ended up facilitating the emergence of the same “cancerous” APC that has accelerated the economic decline of this country and further impoverished our people with no remorse. All so you can be a Minister of the Federal Capital Territory? The lack of self awareness is gobsmacking.
Some days back I came across a video where you talked about death and how you do not cry when you hear about the death of some people because you have no idea what might have caused it considering many a politician swear “over dead bodies” and still go back on their words. Those words made me think, and I could see the reason behind them. You see, in chosing to be God in the affairs of Rivers people, you have closed your eyes and ears to reason; you see nothing and hear nothing that can cause you to rethink on the path you have chosen. In your quest to “show Fubara” you have unwittingly united a vast majority of Rivers people behind him, so much that even those who despised him because of you, now like or love him, because of you too. In your scheming, I will advise you not to forget that “the voice of the people is the voice of God”.
Note that the war which you have or are waging against Governor Fubara, has gone beyond being merely political as you might see in your minds eye. It is now one that, fortunately for some and unfortunately for others, has evolved into a war against Rivers people. It is good to point out that no one has taken a stand against Rivers people and won. No one has gone against God and won. In your defiant characteristic manner, it will be unfortunate if you believe your own hubris and that of those around you on the possibility of you being the first to successfully go against Rivers people. It will be a needless gamble; one where if you win you create more enemies for yourself than you can withstand on your political journey, and if you lose, your legacy becomes an inglorious and irredeemable one in Rivers State, the Niger Delta, and Nigeria at large. For your sake as regards posterity, it is my greatest wish that you have a moment of sobriety and a deep reflection and introspection on this path you have chosen.
Honourable Minister, sir, what is left of your legacy is on the brink of being completely desecrated and relegated to the dustbin of our political history, and it will be a sad end to what I will say has been a wonderful political career that many can only dream of. The ball is in your court, and may God Almighty have mercy on us all and forgive us for our shortcomings.
Gabriel Baritulem Pidomson
Dr Pidomson is former Chief of Staff, Government House, Port Harcourt and former member, Rivers State House of Assembly.
Issues
Investing In Nyesom Wike: A Story Of Dedication, Sacrifice And Ultimate Loss
In 2015, I made a conscious decision to invest my financial resources, my time, and energy into supporting Nyesom Wike’s gubernatorial campaign. I poured my heart and soul into ensuring Nyesom Wike emerged victorious even at the risk of my personal safety.
Again in 2019, I doubled down on my commitment. I invested a significant amount of money to procure campaign outfits for all twenty-three Local Governments Areas of Rivers State. I spared no expense in supplementing Wike’s election efforts in my own local government, and once again putting myself at great risk to safeguard the fairness and transparency of the electoral process.
However, despite my unwavering loyalty and sacrifices, I found myself abandoned and forgotten by Wike. Throughout his eight-year tenure, he failed to acknowledge my contributions or fulfill his promises and agreements. Even as a former Deputy Governor, Wike denied me my severance benefit.
My investment in Wike’s governorship was not just financial – it was a commitment of passion, dedication, and belief in a better future for Rivers State. Yet, his leadership style of dishonesty, greed, drunkenness and rash abuse of senior citizens brought me nothing but disappointment, misery and losses.
By the grace of God, today I speak not as a victim, but as a hero. I have accepted my losses, and I have moved on. And as I reflect on my experience, I cannot help but urge Wike to do the same and allow peace and development to reign in Rivers State.
Nyesom Wike, when you speak of investing in Governor Sim Fubara’s election, remember those like me who also invested in you. Remember the sacrifices I made, the risks I took, and the promises and agreements you left unfulfilled.
It is time for you, Wike, to let go of the past and allow Governor Sim Fubara the breathing space he needs to lead Rivers State forward. Allow him to focus on the challenges of good governance and the aspirations of the people. Spare him these unwarranted and ill-conceived political manoeuvrings founded on personal agenda and not for general good of Rivers State and her people.
I may have lost my investment on Wike, but I have not lost hope in the future of Rivers State. And together, we will continue to strive for a brighter tomorrow.
Long Live the Governor to Rivers State, Sir Siminialayi Fubara!
Long Live the Good People of Rivers State!!
Long Live the Federal Republic of Nigeria!!!
Engr Ikuru is former Deputy Governor of Rivers State.
Tele Ikuru