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Fitch Affirms Nigeria’s FCID Rating, Retains Stable Outlook On Reforms

Published

11 months ago

November 6, 2023

Fitch Ratings has affirmed Nigeria’s long-term foreign-currency issuer default rating at ‘B-‘ with a stable outlook, citing the reforms being implemented by the administration of President Bola Tinubu.
A year ago, the global rating agency lowered the country’s credit score to ‘B-‘ from ‘B’ and attributed the downgrade to continued deterioration in government debt servicing costs and external liquidity despite high oil prices in 2022.
It also affirmed this in May this year.
“Reform progress since President Bola Tinubu’s government came to power in May 2023 has been faster than we anticipated at our last review,” it said in a statement, citing the removal of fuel subsidies, the unification of the multiple exchange rate windows and the devaluation of the naira.
However, there has recently been some backtracking on reforms, notably a lower degree of price discovery in the FX market than in late June, raising doubt about the strength of this positive momentum, Fitch said.
“In addition, new data on the Central Bank of Nigeria (CBN) suggests its net foreign-exchange position is substantially weaker than we previously understood,” it said.
The country’s rating is constrained by weak governance, structurally very low non-oil revenue, high hydrocarbon dependence, security challenges, high inflation, low net FX reserves and ongoing weakness in the exchange-rate framework, according to the rating agency.
Fitch views Tinubu’s cabinet, particularly Finance Minister, Wale Edun, and the new CBN governor as supportive of reform.
“However, there are still sizeable socio-political challenges to implementation, including an acceleration in inflation, which could account for recent backtracking of some reforms,” it said.
Fitch said FX shortages has continued to weigh on economic activity and further FX liberalisation, and deter foreign capital.
In October, the CBN lifted the ban on providing FX for imports of 43 items, and began this week to clear nearly $6.7billion of unmet FX forwards.
“However, there has been a renewed widening of the gap between the official and parallel exchange rates since July with a premium of over 30 percent over the official rate.
“Average daily FX turnover at the official exchange rate window has fallen back to near April 2023 levels (well below pre-pandemic), at $95million in September,” the agency said.
Fitch flagged a lack of detail on a recent government announcement to raise $10billion of FX, including whether this includes World Bank budget support loans of $1.5billion.
It said the country’s public debt (excluding CBN loans) has a fairly long average maturity of 9.7 years.
It said: “The securitisation of N23trillion of CBN loans at a lower interest rate of 9 percent has helped contain general government interest costs, but at near 42 percent of revenues, overall interest expenditure is well above the ‘B’ median of 10.9 percent.
“We expect much lower recourse to CBN financing in 2023-2024 than in 2022, although there is a risk demand from the domestic banking sector turns out to be weaker than expected, despite its ample liquidity and strong deposit growth (38 percent in 1H23 year-on-year).”
Fitch forecasts general government debt/GDP to stabilise at 43.9 percent of GDP in 2024-25, having risen from 35.2 percent at the end of 2022 on the depreciation of the naira.
“We project GDP to slow to 2.6 percent in 2023, from 3.3 percent in 2022, and to expand 3.2 percent in 2024 driven by the services sector and higher oil production.
“Nigeria’s already structurally high inflation rose to an average of 25.5 percent yoy in 3Q23, from 20.3 percent yoy in 3Q22, partly reflecting fuel subsidy removal and naira devaluation,” it said.

News

Nigeria’s Rail Transport Generated N1.69bn In Q2 -NBS report

Published

4 days ago

September 20, 2024

The Tide

The Nigerian rail system generated N1.69billionn in revenue from passengers in the second quarter of 2024, reflecting a 53.14 per cent increase compared to the N1.10billion recorded in the same period of 2023.
This data was disclosed by the National Bureau of Statistics in its report released yesterday.
According to the report, a total of 689,263 passengers travelled by rail in Q2, representing a growth rate of 45.38 per cent compared to 474,117 passengers in the corresponding quarter of 2023.
The volume of goods transported via rail also saw a significant increase, with 143,759 tons moved in Q2 2024, up from 56,936 tons in Q2 2023. Additionally, the Nigerian Railway Corporation reported a volume of 5,940 tons of goods transported through pipelines in Q2 2024, an increase from the 2,856 tons recorded in the same period of the previous year.
Revenue from goods conveyed via rail stood at N537.36m in Q2 2024, a remarkable increase of 206.68 per cent compared to N175.22m in Q2 2023. The movement of goods through pipelines also contributed to revenue generation, with N42.08m collected in Q2 2024, compared to N12.81million in Q2 2023.
Other revenue receipts amounted to N994.68million in Q2 2024, representing a staggering increase of 5,206.68 per cent from the N18.74m recorded in the corresponding period of last year.
In the first quarter, of 2024, The Tide source reported that Nigeria spent more on servicing the debt incurred for building its railways than the revenue generated by its railway system. The country spent 2,470 per cent more on railway debt servicing than it made from revenue from rail services in the first quarter of 2024.

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NDDC Unveils Initiative To Enhance Food Security In N’Delta

Published

4 days ago

September 20, 2024

The Tide

The Niger Delta Development Commission (NDDC) says it is committed to advancing projects and programmes that enhance food security and sustainable growth in the region.
Chief Monday Igbuya, the Delta State representative on the NDDC Board, made this pledge in a statement issued in Port Harcourt, yesterday by the NDDC’s Director of Corporate Affairs, Mrs Seledi Thompson-Wakama.
Igbuya spoke at the inauguration of a training and empowerment programme for women and youths in livestock and agro processing in Amukpe, Sapele area of Delta.
He stated that the NDDC was prioritising livestock training in line with President Bola Tinubu’s Renewed Hope Agenda.
“NDDC is focussed on implementing programmes to ensure food security and agricultural growth in multi sectors, aiming to improve living standards.
“It is our belief that for socio-economic development to take place, there is need to develop manpower in the agricultural sector,” he said.
Igbuya expressed confidence that training farmers would enhance livestock production, create jobs, and alleviate poverty in the Niger Delta.
Mrs Winifred Madume, NDDC Director of Agriculture and Fisheries, said that training farmers and entrepreneurs was essential for improving productivity and market access.
“The commission has been promoting research and development through various institutions and providing farming techniques to beneficiaries,” she said.
The Project Consultant, Dr Simon Akhaine, said that 200 women and youths had registered for the livestock and agro-business skill acquisition programme.
According to him, the programme aims to equip them with the essential knowledge and skills for self-sufficiency in livestock farming, thereby boosting regional food security.

News

Tinubu Shelves UNGA79 Trip To Address National Challenges

Published

4 days ago

September 20, 2024

The Tide

President Bola Tinubu will not attend the 79th session of the United Nations General Assembly in New York this year.
In his stead, Vice President Kashim Shettima will lead Nigeria’s delegation to the annual summit.
Tinubu “wants to focus on domestic issues and address some of the country’s challenges, especially after the recent devastating flooding,” a statement from the President’s Special Adviser on Information and Strategy, Mr. Bayo Onanuga, revealed yesterday.
The statement is titled ‘Vice President Shettima to Lead Nigeria’s Delegation to the 79th United Nations General Assembly.’
It reads, “President Bola Tinubu will not attend the 79th session of the United Nations General Assembly in New York this year.
“Therefore, the President has directed Vice President Kashim Shettima to lead Nigeria’s delegation.”
Tinubu, who returned to the country last Sunday after his trips to China and the United Kingdom, “wants to focus on domestic issues and address some of the country’s challenges, especially after the recent devastating flooding,” said Onanuga.
At UNGA 79, Vice President Shettima will deliver Nigeria’s national statement to the General Assembly, attend important sideline events, and hold bilateral meetings.
The high-level General Debate, with the theme “Leaving No One Behind: Acting Together for the Advancement of Peace, Sustainable Development, and Human Dignity for Present and Future Generations,” will run from Tuesday, September 24, through Saturday, September 28, 2024.