- Fitch affirms Nigeria at ‘B+’, Outlook Negative
A global credit rating agency, Fitch Ratings, on Thursday affirmed Nigeria’s long-term foreign-currency issuer default rating at ‘B+’ with a negative outlook.
It said the ‘B+’ rating reflected Nigeria’s position as Africa’s largest economy and most populous country, its net external creditor position, and its well-developed domestic debt markets, balanced against a high level of hydrocarbon dependence, low levels of domestic revenue mobilisation and GDP per capita, and low rankings on governance and business environment indicators.
The negative outlook, according to a statement, reflects uncertainty about the sustainability of the economic growth momentum as the impact of earlier shocks eases and progress on addressing high interest service ratios.
Fitch forecasts the GDP growth to accelerate to 2.4 per cent in 2018 as the country continues to climb out of the oil price shock recession that characterised 2016 and the first quarter of 2017.
It noted that the growth turned positive in the second quarter of last year, and the recovery of oil production to 2.1 million barrels per day by the fourth quarter boosted oil sector output, adding that greater foreign exchange availability provided a lift to the non-oil export sectors, particularly agriculture.
“Fitch expects that these trends will continue, but notes that tight monetary conditions will continue to weigh on Nigeria’s growth outlook. Fitch forecasts 2019 growth to rise slightly to three per cent, compared with 4.8 per cent for the five years prior to 2016,” it said.
The rating agency noted that the Central Bank of Nigeria at its meeting in April held its monetary policy rate at 14 per cent, where it had been since July 2016.
“The need to support the naira and lingering inflation pressures mean that the Central Bank of Nigeria will ease monetary policy only gradually,” it added.
Fitch noted that the naira had fluctuated close to N360 per US dollar on the Investors and Exporters window since its introduction in April 2017, saying, “Given most forex activity is now handled on the I&E window, this implies a devaluation by 45 per cent since the start of the FX regime adjustments in June 2016.
“Together with higher oil prices and production, this has contributed to the convergence between the parallel market and the I&E rate. However, the forex market remains segmented and the continued use of exchange controls inhibit greater foreign-currency liquidity and capital inflows. In Fitch’s view, there is unlikely to be any further substantial change by the CBN to the existing FX rate regime before the 2019 elections.”
It said increasing oil receipts and import compression had buoyed Nigeria’s trade surplus and brought the current account surplus to an estimated 2.2 per cent of the GDP in 2017.
“Fitch expects that imports will begin to return to historical levels, especially as government capital expenditure increases, and the current account surplus will narrow in 2018.”
The agency noted that Nigeria’s reserves position had increased to a four-year high due to stronger oil receipts and considerable hard-currency bond placements.
Gross international reserves were $47.5bn, or eight months of current external payments, as of end-April.
Fitch said, “The government’s inability to substantially increase domestic revenue mobilisation remains a key rating weakness.”
Nigeria’s Presidential CNG Initiative Allocates N100bn for CNG Buses and EV Adoption
The Presidential Compressed Natural Gas (CNG) Initiative has allocated N100 billion to expedite the deployment of CNG buses nationwide, according to a statement released on Wednesday.
The initiative, designed to catalyze an Auto-gas and Electric Vehicle (EV) revolution in mass transit and transportation, aims to enhance sustainability and cost-effectiveness.
The statement revealed that the fund would be instrumental in supporting the adoption of auto-gas and electric vehicles, signaling a commitment to a more sustainable and economical future in the transportation sector.
The Presidential CNG Initiative plans to leverage over 11,500 CNG and electric-fueled vehicles, along with the deployment of 55,000 conversion kits.
This strategic approach is intended to reduce transportation costs for Nigerians and mitigate the challenges posed by the rising cost of living.
Under the Renewed Hope Agenda, the Presidential CNG Initiative is dedicated to realizing the President’s vision, guided by its steering committee led by FIRS Chairman Zacch Adedeji.
The statement highlighted recent achievements, including strategic technical partnerships and the ongoing commissioning of CNG Conversion centers in key states such as Lagos, Abuja, Kaduna, Ogun, and Rivers.
Several more centers are slated for commissioning in the coming weeks, reflecting the initiative’s momentum and commitment to achieving its objectives.
Nigeria’s Power Transformation: 53 Projects Worth N122bn on Track for May 2024 Completion
The Central Bank of Nigeria (CBN), in collaboration with the Transmission Company of Nigeria (TCN) and power distribution companies, is set to complete 53 power projects by May next year.
Valued at N122 billion, these projects aim to add over 1,000 megawatts to TCN’s wheeling capacity.
During a recent tour of three ongoing projects in Lagos, TCN’s Programme Coordinator, Mathew Ajibade, assured that the projects were not abandoned, refuting speculations.
He confirmed that work is progressing smoothly and is expected to be completed by May 2024, as initially planned.
Assistant Director/Head of Infrastructure Finance Office at the CBN, Tumba Tijani, highlighted the CBN’s support for the power sector, revealing that the bank released a loan at a 9% interest rate in August last year for the projects.
The funding, part of the Nigeria Electricity Market Stabilisation Facility-3, amounts to N122,289,344 and aims to address transmission/distribution bottlenecks, enhance supply to end-users, and unlock unutilized generation capacity.
Tijani disclosed that N85.43 billion has been disbursed into the Advance Payment Guarantee account of the 53 contractors responsible for executing the projects.
The comprehensive project list includes the delivery of power transformers, re-conductoring existing transmission lines, upgrading existing substations, and constructing 33KV line bays.
The initiative reflects a concerted effort to enhance Nigeria’s power infrastructure and meet growing energy demands.
Nigeria’s Untapped Coffee Sector Holds the Key to $2 Billion Annual Revenue
Amidst declining foreign reserves and the need for alternative revenue streams, Nigeria’s overlooked coffee industry emerges as a potential powerhouse capable of contributing over $2 billion annually to foreign exchange earnings.
Industry experts emphasize the necessity for strategic investments and modernized farming practices to unlock the full economic potential of the coffee sector.
While Nigeria is not among the top 10 coffee producers in Africa, the country’s untapped coffee industry holds the promise of significant financial gains, job creation, and sustainable agricultural development.
The urgency for revitalization comes as Nigeria grapples with a decline in foreign reserves, dropping from $38.25 billion in September 2022 to $33.23 billion in the third quarter of 2023.
Salihu Imam, Chairman of the National Coffee and Tea Association of Nigeria, Oyo State, highlighted the global significance of coffee, stating, “Coffee is the second most traded/valuable of all commodities and first in Agricultural commodities in the world.”
The potential economic impact extends beyond immediate financial gains, with Nigeria positioning itself as a key player in the global coffee trade.
Despite its potential, Nigeria’s coffee exports remain modest, producing less than one million bags annually.
In contrast, Ethiopia, the largest coffee exporter in Africa, is projected to produce 8.25 million bags. Experts suggest that Nigeria, with its unique coffee varieties, could generate $2 billion annually.
Segun Lary-Lean, President of the West Africa Specialty Coffee Association, emphasized the robust global demand for coffee, comparing it to water in Western countries.
He noted the significant earnings of coffee-producing nations like Brazil, Colombia, Vietnam, and Kenya, which experienced a 17% increase in coffee earnings.
In a call to action, industry players urge the Federal Government to prioritize strategic investments, modernized farming practices, and value-added processing to harness the coffee sector’s full economic benefits.
Unlocking the potential of Nigeria’s coffee industry stands not only as a financial opportunity but as a catalyst for broader economic growth and diversification.
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