Economy
Fitch Affirms Nigeria at ‘B+’ with Negative Outlook
By Modupe Gbadeyanka
One of the leading rating agencies in the world, Fitch Ratings, has affirmed Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B+’ with a Negative Outlook.
A statement issued yesterday by the firm explained that Nigeria’s ratings were supported by its large and diversified economy, significant oil reserves, its net external creditor position, low external debt service ratio and large domestic debt market.
According to Fitch, these were balanced against relatively low per capita GDP, an exceptionally narrow fiscal revenue base and a weak business environment.
It added that the Negative Outlook reflects the downside risks from rising government indebtedness, and the possibility of a reversal of recent improvements in foreign currency (FX) liquidity and a faltering of the still fragile economic recovery.
Fitch forecasts growth of 1.5% in 2017 and 2.6% in 2018, following Nigeria’s first contraction in 25 years in 2016. GDP growth continued to contract in 1Q17, but by less than in the previous four quarters.
The recovery will be driven mainly by increased FX availability to the non-oil economy and fiscal stimulus, as higher oil revenue and various funding initiatives have raised the government’s ability to execute on capital spending plans.
However, the FX market remains far from fully transparent, domestic liquidity has also become a constraint, and the growth forecast is subject to downside risks. Inflation remains high at 16.1% in July 2017, but Fitch projects it to decline to 11% in 2019.
Crude oil production rose to 1.8 million barrels per day (mbpd) in July 2017, from 1.5 mbpd in December 2016; the increase was driven by the lifting of force majeure at the Forcados export terminal and the completion of maintenance at both Forcados and the Bonga oil field.
Fitch has revised down its expectation of full-year average production to 1.8 mbpd, which is about equal to 2016 production.
Separately, Fitch notes that the imposition of an OPEC quota may cap Nigeria’s crude production at 1.8mbpd, which could limit the oil sector’s upside potential. However, as it excludes condensate production, the quota should not affect Nigeria’s near-term production potential.
In April 2017, the Central Bank of Nigeria (CBN) introduced the Investors & Exporters (I&E) currency window and gradually introduced further measures to improve the liquidity of this instrument.
It also intervenes actively to support the currency while keeping domestic liquidity conditions tight.
In addition, higher oil prices and increased portfolio and FDI inflows have enabled the CBN to increase its provision of FX liquidity to the market. As a result, the parallel exchange rate began to converge towards the I&E rate, currently at around NGN360 per USD, and foreign currency liquidity shortages eased.
Most activity now occurs on the I&E window, and Fitch believes that the I&E rate should now be considered the relevant exchange rate.
Fitch forecasts the general government fiscal deficit to rise slightly to 4.5% of GDP in 2017 from 4.4% in 2016. Tax revenue in the first five months of 2017 underperformed budget expectations, as in 2015-16. The current Medium Term Expenditure Framework envisages a combined NGN3.5 trillion of capital expenditures in 2017 and 2018.
In 2016, with a budget year that ran to May 2017 the government executed approximately N1.2 trillion of the N1.6 trillion forecast in the 2016 budget. Improved financing will see a stronger execution of capital expenditure plans in 2017 and subsequent years. As oil production rises and the overall economy recovers, Fitch expects that higher revenues will drive a narrowing of the general government deficit to 3.4% in 2018.
Nigeria’s general government debt stock is low at 17% of GDP at end-2016, well below the ‘B’ median of 56% of GDP, and Fitch expects only a moderate increase to 20% of GDP at end-2017.
However, low revenues present a risk to public debt sustainability. General government debt to revenue, at 297% at end-2016, is already above the ‘B’ category median of 227% and Fitch forecasts it to increase to 325% in 2017. The ratio is even higher at the federal government level.
Nigeria’s current account surplus is expected to widen slightly to 1.0% of GDP in 2017, from 0.7% in 2016.
Fitch says it expects exports to increase by about 30% in 2017 and an additional 10% in 2018, as oil production and prices increase.
However, imports, which fell by over 30% in 2016, will also rise as dollar availability increases and the non-oil economy recovers.
The international reserves position has increased to USD30.8 billion as of end-July 2017 and it will be bolstered by expected external financing flows. Part of the reserves may be encumbered in forward contracts.
The economic contraction in 2016 and tight FX and naira liquidity weakened asset quality in the Nigerian banking sector. Non-performing loans rose to 12.8% at end-2016, up from 5.3% at end-2015. Rising impairment charges from bad loans have in turn led to capital adequacy ratios falling to 14.8% in 2016, from 16.1% at end-2015. The new FX window has aided FX liquidity for banks in 2017, but credit to the private sector (adjusted for FX valuation effects) is declining.
Nigeria’s ratings are constrained by weak governance indicators, as measured by the World Bank, as well as low human development and business environment indicators and per capita income.
By Aduragbemi Omiyale
Those interested in buying or selling the shares of Aluminium Extrusion Plc on the Nigerian Exchange (NGX) Limited will not be able to do so for now.
This is because trading activities on the company’s securities on the Nigerian bourse have been suspended by the NGX Regulation Limited.
The reason for this is that the organisation has failed to submit its financial statements as required by the listing rules for the perusal of the investing community.
After being given grace periods to file the results, the board of the firm has not done the needful, necessitating the wielding of the stick on the entity.
A notice from Customs Street disclosed that the suspension became effective last Wednesday. It will be lifted when the financial results are submitted.
“In accordance with the default filing rules, the suspension of trading in the shares of the company shall be lifted upon the submission of the relevant financial statements,” a part of the notice said.
Business Post reports that Aluminium Extrusion has not filed its financial statements for the year ended December 31, 2025, more than three months after it was required to submit its financial performance for the last fiscal year.
“Trading license holders and the investing public are hereby notified that pursuant to Rule 3.1, Rules for Filing of Accounts and Treatment of Default Filing, (Default Filing Rules), which provides that if an issuer fails to file the relevant accounts by the expiration of the cure period1, the exchange will: a) send to the issuer a second filing deficiency notification within two business days after the end of the cure period; b) suspend trading in the issuer’s securities; and c) notify the Securities and Exchange Commission (SEC) and the market within 24 hours of the suspension.
“Trading in the shares of Aluminium Extrusion Plc has been suspended from the facilities of Nigerian Exchange Limited effective Wednesday, July 22, 2026, for not filing its Audited Financial Statements for the year ended December 31, 2025,” the disclosure stated.
Shares of Aluminium Extrusion last traded on the domestic stock exchange at N9.90 per unit.
By Dipo Olowookere
Last week on the floor of the Nigerian Exchange (NGX) Limited, 57 equities appreciated, higher than 44 equities in the previous week, while 38 equities shed weight versus 35 equities in the preceding week, with 51 equities closing flat versus the 67 equities recorded a week earlier.
UPDC REIT chalked up 33.33 per cent to trade at N14.20, First Holdco gained 25.59 per cent to finish at N120.50, Unilever Nigeria rose by 19.31 per cent to N147.95, Cadbury Nigeria improved by 18.42 per cent to N67.50, and AXA Mansard expanded by 17.86 per cent to N13.20.
On the flip side, Mecure lost 26.97 per cent to N62.40, Royal Exchange shrank by 12.84 per cent to N1.29, Tripple Gee slumped by 12.34 per cent to N3.41, SUNU Assurances crumbled by 10.00 per cent to N3.60, and BUA Foods dropped 10.00 per cent to close at N845.10.
In the week, the All-Share Index (ASI) went up 1.60 per cent to 247,357.40 points, and the market capitalisation appreciated by 1.61 per cent to N159.588 trillion.
Similarly, all other indices finished higher with the exception of the consumer goods, Lotus II, growth, sovereign bond and commodity indices, which fell by 3.76 per cent, 1.55 per cent, 20.24 per cent, 0.14 per cent, and 1.25 per cent respectively.
As for the trading data, 4.433 billion shares worth N306.143 billion in 255,589 deals were transacted in five days versus the 2.819 billion shares valued at N182.499 billion traded in 226,729 deals in the previous week.
The financial services segment led the activity chart with 3.422 billion shares valued at N207.206 billion traded in 117,545 deals, contributing 77.18 per cent and 67.68 per cent to the total trading volume and value, respectively.
The consumer goods sector traded 201.978 million shares worth N17.171 billion in 28,666 deals, and the ICT industry posted a turnover of 169.481 million shares worth N21.194 billion in 23,107 deals.
First Holdco, Access Holdings, and GTCO accounted for 2.151 billion shares worth N170.793 billion in 44,768 deals, contributing 48.51 per cent and 55.79 per cent to the total trading volume and value, respectively.
By Adedapo Adesanya
Nigeria’s crude oil exports to the United States rebounded strongly in May as shipments rose by nearly 150 per cent month-on-month as American refiners increased purchases of overseas crude.
Latest data from the US Census Bureau showed that crude imports from Nigeria climbed to 2.36 million barrels in May, compared with 946,000 barrels recorded in April.
This indicated renewed demand for Nigeria’s premium light sweet grades amid shifting global patterns and higher international oil prices as the Middle East disruption weighed on trade.
The value of the imports also rose sharply to $279.8 million, up from $85.2 million in the previous month, reflecting both the higher volume of purchases and stronger crude oil prices during the period.
The rebound coincided with a broader increase in crude oil imports by the US.
According to the latest US International Trade in Goods and Services Report, total US crude imports increased by $1.5 billion in May, making crude oil one of the largest contributors to the $12.3 billion rise in overall goods imports during the month.
The report also showed that imports of industrial supplies and materials increased by $3.1 billion, with crude oil accounting for nearly half of the increase.
The recovery marks a significant turnaround after two consecutive months of declining Nigerian crude shipments to the US market. Export volumes had fallen from 4.64 million barrels in February to 1.54 million barrels in March, before dropping further to 946,000 barrels in April.
Despite the fluctuations, cumulative exports between January and May 2026 reached 11.15 million barrels, valued at approximately $926.6 million, reaffirming Nigeria’s strategic position as a key supplier of premium low-sulphur crude grades to the world’s largest economy.
Concerns surrounding crude shipments through the Strait of Hormuz, one of the world’s busiest oil transit routes, are encouraging refiners to increase purchases from Atlantic Basin producers such as Nigeria, whose crude grades offer lower geopolitical shipping risks than some Middle Eastern supplies.
Nigeria’s flagship crude grades, including Bonny Light, Qua Iboe and Escravos, remain highly sought after by US Gulf Coast refiners because of their low sulphur content and high yields of premium petroleum products such as petrol, diesel and aviation fuel.
Although the US has emerged as one of the world’s largest crude oil producers following the shale revolution, many American refineries continue to import light sweet crude to complement domestic production and optimise refining operations.
The rebound in exports also comes as Nigeria gradually restores crude production following improved security operations in the Niger Delta and intensified efforts by government agencies and operators to curb crude oil theft, pipeline vandalism and illegal refining.
