Economy
Fitch Returns Nigeria’s Outlook to Stable, Forecasts 2% GDP Growth
**Says Inflation to Remain at Double Digits through 2019
**Debt to Hits 292% of Revenue
**Buhari Expected to Continue Economic Programme if Re-elected
By Dipo Olowookere
The outlook on Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) has been reviewed upward to stable nearly six months after it was dropped to negative by Fitch Ratings.
In a statement dated November 2, 2018, the global rating agency said it also affirmed its rating on Nigeria at ‘B+’.
According to Fitch, the revision of the outlook on Nigeria’s Long-Term IDRs reflects the ongoing economic recovery and decreasing external vulnerabilities, both supported by increased oil production and higher global oil prices.
It noted that despite setbacks, the Nigerian economy is continuing its slow recovery from the recession that ended in early 2017.
Fitch pointed out that non-oil growth has been supported by an increase in the supply of foreign exchange and will receive an additional boost as the government begins its delayed implementation of the 2018 capital budget.
“Political uncertainty ahead of the general election scheduled for February 2019 may lead to some weakening in growth, but we expect any disruption to be short-lived,” the statement obtained by Business Post said.
It added that the contribution of the oil sector has been positive in the first half of 2018 as oil production, including condensates, has averaged just below 2.1 million barrels per day (mbpd), compared with 1.9 mbpd in 2017.
Fitch said it expects average production of crude oil in Nigeria to remain around 2.1 mbpd through 2018 and 1H19.
Fitch is forecasting a GDP growth of 2 percent overall in 2018, increasing to 2.5 percent in 2019 and 3.3 percent in 2020, and the agency expects that Nigeria’s medium-term growth will average around 4 percent.
It noted that oil production will increase as new exploration and oil infrastructure projects begin to come online, but emphasised that Nigeria will struggle to raise production to the levels envisaged in the 2019-2021 Medium Term Expenditure Framework (MTEF).
Fitch said high inflation has been a rating weakness, but CPI growth slowed to 11.3 percent year-on-year in September 2018, down from a recent peak of 18.7 percent in January 2017.
Inflation fell rapidly in 1Q18, but disinflation has slowed since, as base effects fade and conflicts between herders and farmers affect food supplies.
Fitch said it expects that annual average inflation will fall, but remain in the double digits through 2019.
“Despite falling inflation, Fitch expects that the Central Bank of Nigeria (CBN) will move towards tighter monetary policy to support FX rate stability,” the firm said.
The CBN has kept the monetary policy rate at 14 percent since May 2016, but has conducted monetary policy through its sales of Open Market Operation bills and by managing the reserve ratio.
Foreign currency availability has improved although Fitch believes that it remains a constraint on economic growth. The CBN continues to operate an FX regime with multiple windows and exchange rates, which will not change before the general elections. However, the wholesale interbank FX rate has depreciated, bringing it closer to the rate at the Investors and Exporters window.
Nigeria has increased its stock of international reserves to $44.6 billion (7.2 months of current external payments) as of September 2018, from $37.9 billion at end-2017.
The accumulation of reserves has been a function of both an increase in oil export receipts and an increase in inflow of foreign investments.
The rating agency said Nigeria’s external flows are exposed to global risk sentiments as well as to investor’s views on the country’s political and fiscal developments. However, the build-up of reserves provides a substantial external buffer.
“Nigeria’s ‘B+’ IDRs also reflect the country’s position as Africa’s largest economy and its well-developed domestic debt markets, balanced against low levels of domestic revenue mobilisation and of GDP per capita, a high level of hydrocarbon dependence, and low rankings on governance and business environment indicators.
“Nigeria continues to run persistent fiscal deficits at both the central and general government levels. Fitch forecasts a general government deficit of 4.3 percent of GDP in 2018, approximately the same as 2017.
“The government’s 2019-2022 Medium Term Expenditure Framework envisages a decrease in expenditure following three straight years of increasing capital expenditure. Lower expenditure, as a percentage of GDP, will help the general government fiscal deficit to narrow to 4 percent of GDP in 2019, but the government will continue to experience difficulty in raising non-oil domestic revenue.
“Oil revenue has increased since hitting bottom in 2016, but volatile production levels and inefficiencies within the petroleum sector have limited the transmission of higher oil prices to higher government revenue,” the statement said.
It added that Nigeria’s general government debt will rise to 292 percent of revenue, well above the historical ‘B’ median of 205 percent of revenue, reflecting the accumulation of new debt and the lack of progress on raising government revenue.
At 20 percent of general government revenue, interest payments are already more than twice the ‘B’ median. Federal government interest expenditure to federal government revenue stands much higher at just below 60 percent, the company stated.
“Fitch forecasts Nigeria’s current account (CA) surplus to widen to 3.6 percent of GDP in 2018 as oil export receipts have grown thanks to high oil prices. The CA surplus will narrow in subsequent years as import growth increases following several years of import compression related to tight foreign exchange supply. Nigeria is a net external creditor equivalent to 12 percent of GDP in 2018.
Fitch considers that the easing of foreign-currency liquidity has reduced risks regarding Nigerian banks’ ability to meet dollar liabilities and external debt repayments. However, economic headwinds have continued to affect asset quality.
“Average industry NPLs (according to CBN data) increased to 15 percent at end-2017, reflecting the lag affect from 2015. NPLs are concentrated in the oil and gas sector. The ongoing economic recovery, higher oil prices and widespread loan restructuring is likely to moderately help asset quality, but high NPLs will weigh on private sector credit provision.
“Credit to the private sector returned to modest positive growth in 2018 after tight domestic liquidity and crowding out from government borrowing led to a contraction of 5 percent through November 2017,” the firm said.
It was stressed that the outcome of the upcoming general elections remains uncertain. President Buhari will face a strong challenge from former Vice President Atiku Abubakar, who won the October 2018 primary to be the People’s Democratic Party candidate. Abubakar has made limited statements regarding his economic policy platform, but has criticised the current FX regime and has also signalled his support for devolving more control over public finances to the state governments.
“If Buhari is re-elected, we expect his government to continue implementing the economic programme outlined in the Economic Recovery and Growth Plan released in March 2017.
“Fitch does not expect widespread disruption or instability around the election. However, a flare-up of violence in the Niger Delta around the elections presents downside risk to the fiscal, external and GDP growth forecasts,” the rating agency stated.
By Adedapo Adesanya
Central Securities Clearing System (CSCS) Plc bested four price decliners on the NASD Over-the-Counter (OTC) Securities Exchange on Monday, April 27. The alternative stock market opened the week bullish during the session with a 0.03 per cent uptick.
According to data, the security depository company added N2.61 to its share price to close at N76.26 per unit compared with the preceding session’s N78.87 per unit.
As a result, the market capitalisation of the platform increased by N820 million to N2.425 trillion from N2.424 trillion, and the NASD Unlisted Security Index (NSI) gained 1.38 points to finish at 4,053.97 points compared with the 4,052.58 points it ended last Friday.
The four price losers were led by NASD Plc, which slumped by N3.80 to sell at N34.70 per share versus N38.50 per share. FrieslandCampina Wamco Nigeria Plc fell by N1.45 to N98.10 per unit from N99.55 per unit, Food Concepts Plc slid by 27 Kobo to N2.43 per share from N2.70 per share, and Geo-Fluids Plc dipped by 9 Kobo to N2.91 per unit from N3.00 per unit.
The value of securities transacted by market participants went down by 82.0 per cent to N7.4 million from N41.3 million units, the volume of securities declined by 28.5 per cent to 319,831 units from 447,403 units, and the number of deals dropped by 34.1 per cent to 29 deals from 44 deals.
Great Nigeria Insurance (GNI) Plc was the most active stock by value on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by CSCS Plc with 59.6 million units sold for N4.0 billion, and Okitipupa Plc with 27.8 million units exchanged for N1.9 billion.
Also, GNI Plc was the most traded stock by volume on a year-to-date basis with 3.4 billion units valued at N8.4 billion, followed by Resourcery Plc with 1.1 billion units traded for N415.7 million, and Infrastructure Guarantee Credit Plc with a turnover of 400 million units worth N1.2 billion.
By Adedapo Adesanya
The first trading day of the week in the currency market was bearish for the Naira in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Monday, April 27.
Yesterday, it lost N5.80 or 0.43 per cent against the United States Dollar to trade at N1,364.24/$1, in contrast to the N1,358.44/$1 it was traded last Friday.
In the same vein, the Nigerian currency depreciated against the Pound Sterling in the official market by N13.70 to close at N1,847.72/£1 versus the preceding session’s N1,834.02/£1, and slumped against the Euro by N11.56 to sell at N1,602.29/€1 versus N1,590.73/€1.
Also, the Nigerian Naira tumbled against the greenback during the trading day by N5 to quote at N1,385/$1 compared with the previous rate of N1,380/$1, and at the GTBank FX desk, it traded flat at N1,370/$1.
The poor performance of the domestic currency could be attributed to liquidity shortage at the official currency market on Monday, which came amid surging demand for international payments. At $76.50 million, interbank liquidity printed higher across 79 deals, up from the $43.572 million reported on Friday.
Nigeria’s gross external reserves declined to $48.45 billion amid a month-long decline in inflows, amid uncertainties in the global commodity market. The depletion of foreign reserves could be partly attributed to the Central Bank of Nigeria’s intervention in the FX market.
The market remains perturbed by persistent concerns over liquidity constraints, policy transparency, and weakening confidence in Nigeria’s FX market, while boosters, including oil prices, continue to look rocky due to stalled discussions and unclear ceasefire negotiations between the US and Iran.
A look at the cryptocurrency market, Bitcoin (BTC) has been rejected near $79,000 three times in eight sessions, leaving the level as the de facto ceiling of its current trading range even as major cryptocurrencies trade lower over the past day. It lost 0.9 per cent to sell at $77,003.61.
Analysts say that upcoming US Federal Reserve policy decisions and top tech firms’ earnings this week could provide the catalyst to push bitcoin decisively above $80,000.
The market also continued to weigh Iran’s interim deal proposal to reopen the Strait of Hormuz, which failed to advance over the weekend. The White House said US officials were discussing the latest Iranian proposal but maintained “red lines” on any deal to end the eight-week war.
Solana (SOL) dropped 1.8 per cent to $84.25, Ripple (XRP) went down by 1.6 per cent to $1.39, Ethereum (ETH) depreciated by 1.3 per cent to $2,290.00, Binance Coin (BNB) declined by 0.5 per cent to $625.18, and Cardano (ADA) fell by 0.2 per cent to $0.2480.
However, Dogecoin (DOGE) rose by 2.0 per cent to $0.1002, and TRON (TRX) appreciated by 0.2 per cent to $0.3242, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Aduragbemi Omiyale
One of the leading salt makers in Nigeria, NASCON Allied Industries Plc, has set its eyes on some strategies aimed to deliver more value to shareholders.
The chief executive of the company, Mrs Aderemi Saka, said efforts are being made to surpass the performance of last year.
In the 2025 financial year, the organisation recorded a 27 per cent growth in revenue, while post-tax profit grew by over 100 per cent to N33.5 billion, with the earnings per share (EPS) expanding by 115 per cent to N12.41 from N5.77 Kobo in the previous year.
The impressive performance, attributed to a clear strategic vision, disciplined execution and sustained focus on cost-saving initiatives across production, logistics and fleet management, resulted in a 200 per cent increase in dividend payout to shareholders to N6 per share.
Mrs Saka, at the firm’s Annual General Meeting (AGM) in Lagos, said the strategic priorities for the coming year include deeper cost optimisation, expanded market penetration, strengthened energy diversification and sustainability initiatives, as well as accelerated digital transformation and process automation.
Earlier, the chairman of NASCON, Mr Olakunle Alake, informed shareholders that the achievements for last year were due to improved operational efficiency, strict cost management and the dedication of the company’s workforce.
“The operating environment in 2025 was characterised by economic volatility, persistent inflation and structural changes across key sectors. Yet, NASCON remained resilient and strategically focused, delivering outstanding value to shareholders,” Mr Alake said.
He noted that operational sustainability remains a core pillar of the organisation’s strategy, stressing that during the year, NASCON introduced Compressed Natural Gas (CNG) trucks into its logistics fleet to reduce fuel costs and minimise exposure to diesel price volatility.
In addition, the company’s state-of-the-art salt refinery, its largest production facility, now runs entirely on natural gas, significantly boosting efficiency while reinforcing NASCON’s commitment to environmental sustainability.
A director in the organisation, Mrs Tonya Lawani, emphasised that the firm remains firmly committed to the principles that have driven its excellent performance, noting that NASCON approaches the new financial year from a position of strength, with further opportunities for growth and improvement.
Speaking on behalf of shareholders, Mr Faruk Umar expressed strong confidence in the company’s trajectory, citing NASCON’s rising share price, which recently crossed the N100 mark, and projecting further appreciation.
He commended the quality of the Board and management team, noting that strong leadership and recent executive appointments have positioned the entity to deliver even greater value to all stakeholders.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism10 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn