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Fitch Compares Nigeria Sovereign Debt With Emerging Markets

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In a presentation on Nigeria’s Debt Capital Markets, Richard Fox, Fitch Ratings’ Head of Africa/Middle East sovereigns, compares Nigeria’s current sovereign debt metrics to those of Emerging Markets (EMs) that have recently made the transition to investment grade (IG).

Since 2004, seven EMs have moved up the rating scale from Nigeria’s current ‘BB-’ level to the lowest investment grade.

The most recent was Indonesia in 2011; the others are Azerbaijan (2010), Brazil (2008) and Bulgaria, Kazakhstan, Romania and Russia (2004). Of the seven, four are oil producers to varying degrees.

The three notch upward movement has typically taken between six and eight years, which makes it a plausible ambition for Nigeria in the context of its Vision 2020.

Among the key indicators that Fitch uses to assess sovereign credit worthiness, three stand out as being well outside the range of experience of recent newly IG EMs: per capita GDP, reserve cover and governance.

The latter is measured by the World Bank’s governance indicators.

These areas represent Nigeria’s biggest challenge to improving its rating, as highlighted in Fitch’s previous research.

Of the three, reserve cover is the most susceptible to rapid improvement, particularly at current high oil prices.

But although Nigeria’s reserves have risen by around USD2bn this year, they are not rising as fast as in the majority of big oil exporters.

Other external data such as the current account and net external assets are comparable to those of newly IG sovereigns.

The exception is commodity dependence, reflecting the dominance of oil revenues.

Although some newly IG oil exporters have had even higher oil dependence, this has been compensated by a stronger international reserves cushion against oil shocks.

Part of the explanation for the improved trend of reserves this year is the authorities’ actions to reduce FX demand for refined petroleum imports, including the partial reduction in the petroleum subsidy earlier this year.

The reduction in the benchmark oil price in the 2012 budget, albeit partially reversed by the National Assembly, was also a step in the right direction.

Nevertheless, the Federal government’s budget deficit and consolidated government budget surplus are within the range experienced by newly IG countries.

They are not as strong as some of the major oil producers when they made the transition to IG – notably Azerbaijan and Russia.

Increased fiscal savings in Nigeria’s new sovereign wealth fund will be a key driver of Nigeria’s rating.

Nigeria’s stable and robust GDP growth of more than 7% since 2009 compares well with the record of newly IG sovereigns and is even more creditable given its reliance on the non-oil sector.

But structural reforms planned in the electricity, oil and agriculture sectors, will be crucial if growth is to be diversified and sustained closer to double digits, in order to close the large gap in per capita income.

With a likely substantial increase in nominal GDP this year due to the rebasing of the national accounts, Nigeria’s per capita GDP will still be outside the range enjoyed by the newly IG

countries when they became IG.

Nigeria’s inflation rate is also still on the high side – in low double digits compared to an average of 7.5 per cent for newly IG sovereigns and a range of 5 per cent to 12 per cent.

By contrast, Nigeria scores much better on the government debt ratio which, despite creeping up, at a little under 20 per cent of

GDP is lower than the 26per cent average for newly IG sovereigns.

Nigeria’s ability to finance itself domestically, in its relatively

well developed domestic capital market, is also a major strength compared to many newly IG sovereigns

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NIGCOMSAT Seeks Policy To Harness AI Potentials 

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The Nigerian Communications Satellite Limited (NIGCOMSAT), the country’s satellite operator, has called for immediate promolgation of policy action that will enable the country to harness the potentials of Artificial Intelligence (AI).
NIGCOMSAT, also warned that Nigeria risks missing out on Africa’s projected $1.2trillion share of the global AI economy by 2030.
Managing Director of NIGCOMSAT, Nkechi Egerton-Idehen, disclosed this in a statement issued at the weekend following her participation in the Meeting of the National Council for Communications, Innovation, and Digital Economy.
“Artificial intelligence is reshaping industries, economies, and societies worldwide, with projections that it will contribute up to $15.7trillion to the global economy by 2030. Africa stands to gain $1.2trillion of this if the right policies and innovations are in place”, Idehen said, citing a PricewaterhouseCoopers report.
The NIGCOMSAT MD underscored the transformative potential of AI in agriculture, highlighting its applicability in Benue State, widely regarded as Nigeria’s “food basket.”
According to her, machine learning tools could revolutionize agricultural practices by improving pest detection and optimizing planting schedules using satellite imagery.
“AI offers us the chance to not only flourish economically but also to achieve food security. However, we must ask ourselves if we are prepared to manage this technology responsibly”, she added.
Idehen also noted that internet access remains a significant barrier to AI adoption in Nigeria.
“For AI tools to be effective, basic digital infrastructure is essential. Addressing this gap must be a priority.
“AI is happening. We have the opportunity to manage this technology revolution responsibly, both in Africa and globally, through innovation and governance”, she said.
In August 2024, the Federal Ministry of Communications, Innovation, and Digital Economy released a draft National Artificial Intelligence Strategy, aiming to position Nigeria as a global leader in AI.

Corlins Walter

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We Have Spent N1bn On Electrification -LG Boss

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The Chairman of Emohua Local Government Council, Chief David Omereji, has said  the council has so far spent over N1 billion  for the electrification of communities in the area.
Omereji said this while addressing staff of the council at the council headquarters recently.
He said the move was part of his administration’s resolve to ensure  peace and development of the LGA.
According to him,  the Council spent about N29 million on monthly basis for the maintenance of the Emohua Local Vigilante group known as OSPAC, with each member being paid a stipend of N100, 000 monthly.
He diaclosed that 11 out of the 14 wards are currently enjoying electricity, while efforts are on to light-up the remaining ones.
“I also want to use this opportunity to inform the political class for purposes of records and for the understanding of the people that the Council under my watch have done more than enough”, he said .
The Emolga boss explained  that all that have been achieved  were through the personal effort of the Council, without support from anybody as rumoured in some quarters.
Omereji further reaveled that a number of other projects, including roads, fencing of schools, hospitals, courts premises, and reconstruction of some abandoned buildings at the Council Headquarters are being undertaken by his administration.
He enjoined the people of the area to support his administration’s drive to bring purposeful development to the LGA.
The Emohua Council boss, who reiterated his hatred for noise making, stated that  his  works would speak for him, and solicited the support of staff of the council and the entire people of the area.
He noted the fact that some people may not be happy with his achievements, saying that he would remain focused, while  advising critics of his government to do so constructively with facts and figures.

King Onunwor

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Ogoni Rejects NNPC-Sahara  OML11 Deal … Wants FG’s Intervention

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The Movement for the Survival of the Ogoni People (MOSOP) has raised some ethical questions over a Financial and Technical Services Agreement (FTSA) between Sahara Energy and West African Gas Limited (WAGL), an affiliate of the Nigerian National Petroleum Company (NNPC).
MOSOP said the agreement was not done in good faith, not in the interest of the Nigerian people, and did not follow due process.
Foremost Ogoni born activist and  MOSOP  leader, Fegalo Nsuke, who made this known in Abuja, weekend, described the Sahara-WAGL deal as fraudulent, deceptive and an insult on the intelligence and integrity of the Nigerian nation.
Nsuke called on President Bola Ahmed Tinubu to cancel that FTSA between Sahara Energy and WAGL, noting that the agreement is fraught with irregularities and deceptive.
“What Sahara and the NNPC did in the FTSA between Sahara and WAGL is shameful and depicts high level corruption in public service of our country.
“WAGL is an affiliate of Sahara and the NNPC. How then can Sahara go into an agreement with its own affiliate? It’s as good as going into an agreement with itself. This is deceptive and fraudulent”, Nsuke said.
He continued that “Sahara Energy is certainly not a company the Ogoni people want on their soil and we are calling on Mr. President, Bola Ahmed Tinubu, to terminate any deal between the NNPC and Sahara Energy over OML 11, and to allow for an inclusive arrangement that considers a fair treatment of the Ogoni people in the distribution of revenues from natural resource extraction on Ogoni soil.
“The last Ogoni Congress has been unequivocal on the Ogoni demand for justice and has given a clear path to resolve the three decade old conflict between all critical parties.
“It will be good to explore this path to peace and development for Ogoni and for our country”.
Nsuke accused Sahara Energy and the NNPC of frustrating the progress made by MOSOP to achieve a permanent solution to the Ogoni problem.
He urged a presidential intervention with deep consideration for a fair treatment of the Ogoni people in order to permanently address the problem.
He noted that Sahara Energy should give up on the Ogoni area to allow for an engagement in the interest of the country and the people.
Recall that MOSOP and Sagara Energy have recently been engaged in a row in what MOSOP describes as an unholy relationship between Sahara Energy and the NNPC over OML 11.
MOSOP expressly rejected Sahara Energy and called for a fair treatment of the Ogoni people in natural resource extraction in Ogoni.
It noted that Ogoni people, led by MOSOP, paid the sacrifice to take the oil from Shell, hence “the position of MOSOP must be taken into consideration in decisions relating to resumption of oil production in Ogoni”.

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