Economy
Nigeria Rejects Moody’s Rating Downgrade
By Modupe Gbadeyanka
Federal Government has strongly rejected the downgrading of Nigeria from a B1 stable to a B2 stable rating by Moody’s Investors Service Research.
In a statement dated Wednesday, November 8, 2017, the Nigerian authorities said the downgrade was not a true reflection of the current state of the country’s economy, which government said has improved.
“The attention of the Federal Ministry of Finance (FMF), Central Bank of Nigeria (CBN) and the Debt Management Office (DMO) has been drawn to today’s announcement of the decision by Moody’s to downgrade Nigeria from a B1 stable to a B2 stable rating.
“This is equivalent to Nigeria’s existing B/Stable Outlook rating from S&P and slightly lower than Nigeria’s B+/Negative Outlook rating from Fitch.
“While we respect the right of Moody’s to make this decision, we strongly disagree with the premise and must address some of the conclusions upon which the decision rests,” the statement said.
It said further that, Since Nigeria was last rated by Moody’s (as B1 stable) in December 2016, Nigeria has successfully emerged from a protracted recession and recorded important improvements across a broad range of indices, including A return to economic growth of 0.55% in Q2 2017, and returning business confidence, as evidenced by a PMI index of 55.0; a stable foreign exchange window for importers and exporters, with improving liquidity and convergence of the parallel and official rates; significantly improved foreign exchange reserves, now totalling $34 billion; increased oil production, combined with stable and now improving oil prices; a slowly improving revenue profile, with non-oil revenue (principally taxes) up 10%; month on month improvements in inflation levels since January 2017, with inflation continuing to trend downwards; strong year on year improvement on the World Bank Ease of Doing Business Rankings from 169th to 145th place, a 24 place move in one year; and in 2016, the highest capital expenditure deployment since 2013, making investments in critical infrastructure to support further growth.
“At the heart of Moody’s rationale is the need for Nigeria to improve non-oil revenue aggressively. This is absolutely and directly aligned to the government’s priorities. This is critical to our economic development and is the basis for the establishment of a stable and inclusive economy, which can withstand global shocks and has the resources to increase investments in our infrastructure.
“We have put in place a number of measures to improve our collection and FIRS has made good progress in increasing revenues, particularly when considering that the economy is still recovering from the oil price shock.
“Examples include introduction of a Tax Amnesty (the on-going Voluntary Assets and Income Declaration Scheme (VAIDS)), which is showing positive results; plugging leakages and deployment of technology driven revenue management strategies. An example is Health Pay, a pilot cashless revenue project in the health sector, which has recorded material increases in revenue.
“We have seen improvements in revenue in 2017. Fiscal revenues are linked directly to both the performance of the economy and the number of tax payers contributing. As a result of the foundation that has been established in 2017, we expect, similar positive trends in 2018.
“Our revenue initiatives are changing the mix of revenue sources available to government from the traditional oil or debt to a combination of oil, debt and domestic revenue. For example, the 2018 budget includes N710 billion proceeds from the restructuring of the Government’s equity in the JV oil assets. The reform is aimed at increasing private sector equity participation to improve efficiencies in the sector and also provides revenue to the government which will be deployed solely and exclusively for creating new assets in Nigeria.
“Moody’s highlights that while our debt levels remain low, interest is consuming a larger portion of revenue.
“It should be noted we are implementing a very prudent fiscal and debt management strategy to reduce the cost of our debt. Given the relatively higher domestic interest rates, we are focusing on longer term external borrowing with an aim to re-balance our domestic and international debt portfolio to a 60:40 split over the coming years.
“Our existing proposal to refinance $3 billion of treasury bills through external borrowing is expected to reduce Nigeria’s debt servicing costs, further improving our fiscal position.
“We also expect this strategy to help to reduce the ‘crowding out’ effect of government borrowing in the domestic markets.
“The challenges that are highlighted in the Moody’s rating are clear, and are being addressed by the government, with the environment having improved significantly since the last period of assessment.”
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited remained in the green territory on Wednesday after further appreciating by 0.11 per cent, driven by gains in bellwethers like MTN Nigeria, GTCO, and others.
Data from Customs Street showed that the insurance and the consumer goods sectors went up by 0.76 per cent and 0.42 per cent apiece, offsetting the 0.98 per cent loss posted by the banking index and the 0.11 per cent decline suffered by the industrial goods counter. The energy sector closed flat at the close of transactions.
When the closing gong was beaten at midweek, the All-Share Index (ASI) increased by 219.87 points to 200,925.75 points from 200,705.88 points, and the market capitalisation went up by N141 billion to N128.977 trillion from N128.836 trillion.
Investor sentiment remained strong yesterday after the bourse recorded 36 price gainers and 33 price losers, representing a positive market breadth index.
Legend Internet grew by 10.00 per cent to N7.26, Zichis gained 9.93 per cent to settle at N11.40, Premier Paints expanded by 9.93 per cent to N31.00, John Holt improved by 9.79 per cent to N15.70, and Consolidated Hallmark advanced by 6.26 per cent to N5.26.
On the flip side, Fidson declined by 9.97 per cent to N94.85, Austin Laz lost 9.89 per cent to quote at N4.01, Living Trust Mortgage Bank shrank by 7.08 per cent to N4.46, Secure Electronic Technology slumped by 7.04 per cent to N1.32, and Sterling Holdco depreciated by 5.56 per cent to N7.65.
The busiest equity for the day was Wema Bank, which transacted 104.3 million units worth N2.8 billion. Access Holdings traded 42.8 million units valued at N1.1 billion, Zenith Bank exchanged 33.9 million units for N3.6 billion, Zichis sold 26.6 million units worth N221.2 million, and GTCO recorded a turnover of 25.6 million units valued at N2.9 billion.
In all, investors bought and sold 538.0 million units for N25.4 billion in 45,641 deals on Wednesday compared with the 1.3 billion units worth N65.3 billion traded in 89,949 deals on Tuesday, implying a decrease in the trading volume, value, and number of deals by 58.62 per cent, 61.10 per cent, and 49.26 per cent apiece.
By Aduragbemi Omiyale
The federal government, through the Minister of Women Affairs and Social Development, is working together with the Nigerian Exchange (NGX) Group Plc to deepen the participation of women in capital markets.
The Minister of Women Affairs and Social Development, Ms Imaan Sulaiman-Ibrahim, underscored the urgency of inclusion in achieving national economic ambitions.
“The capital market reflects our collective choices, who participates, who has access, and who benefits. Women remain underrepresented in formal finance despite their critical role in Nigeria’s productivity.
“Through strategic partnerships and targeted interventions, we are working to change this narrative and expand opportunities for women across the economy.
“Achieving a one-trillion-dollar economy requires the full participation of Nigerian women,” she said at the closing gong ceremony at the NGX on Tuesday in Lagos.
She said the government was ready to partner with capital market stakeholders to expand financial access and unlock opportunities for women across the country.
Welcoming the Minister, the chairman of NGX Group, Mr Umaru Kwairanga, commended the Ministry’s leadership in promoting women’s development and economic participation.
“Women are central to Nigeria’s economic progress. As we work towards a more inclusive and resilient economy, the capital market remains a vital platform for expanding access to finance, supporting women-led enterprises, and enabling broader participation in wealth creation.
“NGX Group remains committed to partnering with the Ministry to drive sustainable impact and empower the next generation of women leaders,” he stated.
Also speaking, the Director General of the Securities and Exchange Commission (SEC), Mr Emomotimi Agama, emphasised the importance of deliberate inclusion.
“Behind every successful market are women. For Nigeria’s capital market to reach its full potential, we must be intentional about empowering women as active participants.
“Current participation levels do not yet reflect our population or potential. Collaborations like this send a strong call to action for more women across Nigeria to engage with the market and contribute to national growth,” the SEC chief stated.
On his part, the chief executive of NGX Group, Mr Temi Popoola, said, “At NGX Group, we are building a dynamic and inclusive market ecosystem that expands access to investment opportunities and supports diverse participants. Through partnerships such as this, we are unlocking new pathways for women to participate as investors, entrepreneurs, and wealth creators.”
By Adedapo Adesanya
The Minister of State for Petroleum Resources (Oil), Mr Heineken Lokpobiri, has acknowledged that the country still depends on imported petroleum products as domestic refining cannot fully meet local demand.
Speaking on the state of the downstream sector at the CERAWeek by S&P Global Conference in Houston, Texas, Mr Lokpobiri acknowledged that while local refining capacity has improved significantly, it remains insufficient to fully cover national consumption.
The Minister noted that Nigeria was making measurable progress, with domestic refining contributing a growing share of supply, but added that imports remain a critical component of the country’s fuel supply mix for now.
“We are not yet at a point where local production alone can satisfy total consumption,” he said, underscoring the need to sustain imports while capacity continues to build.
The Minister emphasised that Nigeria’s daily fuel consumption stands at about 50 million litres, while domestic refining output remains below that level, making imports necessary to bridge the shortfall and ensure supply stability.
Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) aligns with this position, showing that although local refining volumes have risen in recent months, they are not yet sufficient to fully meet national demand.
Dangote refinery had earlier this year said it can supply 75 million litres of Premium Motor Spirit (PMS) daily against an estimated national consumption of 50 million litres, alongside 25 million litres of Automotive Gas Oil (AGO) compared with an estimated daily demand of 14 million litres.
It also stated that it has the capacity to supply 20 million litres of aviation fuel daily, far above the estimated maximum domestic consumption of four million litres.
According to the refinery, the availability of volumes above prevailing demand provides critical supply buffers, enhances market stability and reduces reliance on imports, particularly during periods of peak demand or logistical disruption.
The minister highlighted what he described as a fundamental shift in Nigeria’s petroleum sector following recent reforms.
He noted that Nigeria has moved away from a subsidy-driven regime that, for years, placed a heavy fiscal burden on the country and distorted the downstream market.
According to him, the removal of subsidies has not only eased pressure on government finances but also curtailed widespread fuel smuggling and arbitrage that previously thrived under price differentials.
Mr Lokpobiri said the deregulation of the downstream sector is beginning to deliver results, with a more transparent and competitive market structure emerging. This, he added, is helping to restore investor confidence and attract new investments into refining and related infrastructure.
The minister also pointed to ongoing efforts to rehabilitate existing refineries and support new refining projects, noting that these initiatives are critical to closing the gap between production and consumption.
He emphasised that while Nigeria is making steady progress toward boosting domestic refining capacity, noting that the transition will take time to sustain investment and policy consistency.
At the same time, Mr Lokpobiri underscored Nigeria’s ambition to evolve beyond meeting local demand to becoming a supplier of refined petroleum products within the West African region.
However, he maintained that achieving that goal depends first on significantly expanding domestic capacity.
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