Economy

S&P Cuts Nigeria’s 2020 GDP Growth Forecast to 1.5%

Published

6 years ago

27/03/2020

By Dipo Olowookere

The Gross Domestic Product (GDP) growth forecast for Nigeria in 2020 has been revised downward to 1.5 percent from 2.2 percent by Standard and Poors (S&P).

In a press statement issued on Thursday, the rating agency also announced lowering its long-term foreign and local currency sovereign credit ratings on Nigeria to ‘B-’ from ‘B’.

In addition, the renowned company said it has affirmed its ‘B’ short-term sovereign credit ratings on Nigeria, while downgrading its long-term Nigeria national scale rating to ‘ngBBB’ from ‘ngA-’ and affirming the ‘ngA-2’ short-term Nigeria national scale rating.

S&P explained that the economic growth projection was reduced to 1.5 percent “since the effects of lower oil revenue will filter through to the non-oil real sector” of the country.

“We forecast real GDP will expand by a modest 2 percent over 2020-2023.

“In per capita terms, this translates into economic contraction over our forecast horizon through 2023. Nigeria’s per capita GDP remains below that of several peers, with income levels below $2,000 in 2020,” it said in the statement.

Early this month, the Organisation for the Oil Producing Exporting Countries (OPEC) failed to agree to a proposed reduction of 1.5 million barrels per day (mmbbl/d) to address an expected significant drop in global demand partly due to the spread of the coronavirus.

Shortly after the meetings, Saudi Arabia announced that it was immediately slashing its official selling price and would increase its production to over 12 mmbbl/d in April after the current production cut expires next Tuesday.

These actions possibly signal that, despite a collapse in global demand and shrinking physical markets, Russia and Saudi Arabia may engage in a price war to try and maintain market share and market relevance.

Oil markets are now heading into a period of severe supply-demand imbalance in second-quarter 2020.

Given that Nigeria’s reliance on oil revenue is still high, over 85 percent of goods exports and about half of fiscal revenues, lower oil prices in 2020 will significantly hurt its external and fiscal positions, S&P said.

“We estimate the economy will grow about 1.5 percent in 2020 (our previous estimate was 2.2 percent) and average 2.0 percent in 2020-2023.

“Our forecast for a sharp decline in oil prices, and consequent lower export revenues, are likely to result in the current account deficit increasing to 3.3 percent of GDP this year before moderating over the medium term and averaging -1.1 percent in 2020-2023,” the agency said.

S&P had said in February 2020 that the Brent oil prices were expected to average $60 per barrel (/bbl) in 2020 and to gradually decline to $55/bbl from 2021.

However, based on recent development, it has now projected price of the Brent oil at $30/bbl in 2020, $50/bbl in 2021, and $55/bbl from 2022.

In the 2020 budget, Nigeria pegged the crude oil benchmark at $57/bbl, but the COVID-19 pandemic forced a downward review recently to $30/bbl, with the size of the budget cut by N1.5 trillion from just over N10 trillion.

In its statement yesterday, S&P said on the fiscal side, lower oil-related revenue will keep general government in Nigeria (federal and state government combined) fiscal deficits elevated at about 5 percent of GDP this year, delaying planned gradual consolidation, before averaging 4.2 percent in 2020-2023.

The federal government has and will continue to make efforts to increase non-oil revenue, including the increase in value-added tax to 7.5 percent from 5.0 percent, reducing fuel subsidies, and raising electricity tariffs among other administrative measures, it said.

“In addition, adjustments to the exchange rate should also yield the federal government higher Naira revenues. Nevertheless, these measures are not expected to be enough to compensate for the forecast reduction in oil revenue. In addition, COVID-19-related spending is likely to affect expenditure,” the statement said.

Economy

NBA Demands Suspension of Controversial Tax Laws

Published

1 day ago

24/12/2025

Modupe Gbadeyanka

By Modupe Gbadeyanka

The federal government has been asked by the Nigerian Bar Association (NBA) to suspend the implementation of the controversial tax laws.

In a reaction to the tax reform acts, the president of the group, Mr Afam Osigwe (SAN), the suspension of the laws would allow for a proper investigation into allegations of alterations in the gazetted and harmonised copies.

A member of the House of Representatives, Mr Abdussamad Dasuki, alleged that some parts of the laws passed by the parliament were different from the gazetted copy.

To address the issues raised, the NBA said it is “imperative that a comprehensive, open, and transparent investigation be conducted to clarify the circumstances surrounding the enactment of the laws and to restore public confidence in the legislative process.”

“Until these issues are fully examined and resolved, all plans for the implementation of the Tax Reform Acts should be immediately suspended,” the association declared.

It noted that the controversies “raise grave concerns about the integrity, transparency, and credibility of Nigeria’s legislative process.”

“These developments strike at the very heart of constitutional governance and call into question the procedural sanctity that must attend lawmaking in a democratic society,” it noted.

“Legal and policy uncertainty of this magnitude has far-reaching consequences. It unsettles the business environment, erodes investor confidence, and creates unpredictability for individuals, businesses, and institutions required to comply with the law. Such uncertainty is inimical to economic stability and should have no place in a system governed by the rule of law.

“Nigeria’s constitutional democracy demands that laws, especially those with profound economic and social implications, emerge from processes that are transparent, accountable, and beyond reproach. Anything short of this undermines public trust and weakens the foundation upon which lawful governance rests.

“We therefore call on all relevant authorities to act swiftly and responsibly in addressing this controversy, in the overriding interest of constitutional order, economic stability, and the preservation of the rule of law,” the organisation stated.

Economy

MRS Oil, Two Others Raise NASD Bourse Higher by 0.52%

Published

1 day ago

24/12/2025

Adedapo Adesanya

By Adedapo Adesanya

Demand for hot stocks, including MRS Oil Plc, buoyed the NASD Over-the-Counter (OTC) Securities Exchange by 0.52 per cent on Tuesday, December 23.

The energy company was one of the three price gainers for the session as it chalked up N19.69 to sell at N216.59 per share versus the previous day’s value of N196.90 per share.

Further, FrieslandCampina Wamco Nigeria Plc gained N2.95 to close at N56.75 per unit versus N53.80 per unit and Golden Capital Plc appreciated by 84 Kobo to N9.29 per share from Monday’s N8.45 per share.

Consequently, the market capitalisation went up by N10.95 billion to N2.125 trillion from N2.125 trillion and the NASD Unlisted Security Index (NSI) rose by 18.31 points to 3,570.37 points from 3,552.06 points.

Yesterday, the NASD bourse recorded a price loser, the Central Securities Clearing System Plc (CSCS), which gave up 17 Kobo to close at N33.70 per unit against the previous trading value of N33.87 per unit.

The volume of securities traded at the session went down by 97.6 per cent to 297,902 units from the previous day’s 12.6 million units, the value of securities decreased by 98.5 per cent to N10.5 million from N713.6 million, and the number of deals remained flat at 32 deals.

By value, Infrastructure Credit Guarantee Company (InfraCredit) Plc ended as the most actively traded stock on a year-to-date basis with 5.8 billion units exchanged for N16.4 billion. This was followed by Okitipupa Plc, which traded 178.9 million units valued at N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.

In terms of volume, also on a year-to-date basis, InfraCredit Plc led the chart with a turnover of 5.8 billion units traded for N16.4 billion. Industrial and General Insurance (IGI) Plc ranked second with 1.2 billion units sold for N420.7 million, while Impresit Bakolori Plc followed with the sale of 536.9 million units valued at N524.9 million.

Economy

NGX All-Share Index Soars to 153,354.13 points

Published

1 day ago

24/12/2025

Dipo Olowookere

By Dipo Olowookere

It was another bullish trading session for the Nigerian Exchange (NGX) Limited as it closed higher by 0.59 per cent on Tuesday.

The market further rallied due to continued interest in large and mid-cap stocks on the exchange by investors rebalancing their portfolios for the year-end.

Yesterday, Aluminium Extrusion sustained its upward trajectory after it further appreciated by 9.96 per cent to N14.90, as Austin Laz gained 9.81 per cent to close at N2.91, Custodian Investment improved by 9.69 per cent to N38.50, and First Holdco soared by 9.35 per cent to N50.30.

Conversely, Royal Exchange declined by 7.22 per cent to N1.80, Champion Breweries shrank by 6.57 per cent to N15.65, NASCON lost 5.36 per cent to trade at N105.05, Sovereign Trust Insurance depreciated by 5.28 per cent to N3.77, and Japaul went down by 4.51 per cent to N2.33.

At the close of business, 29 shares ended on the gainers’ table and 27 shares finished on the losers’ log, representing a positive market breadth index and bullish investor sentiment.

This raised the All-Share Index (ASI) by 895.06 points to 153,354.13 points from 152,459.07 points and lifted the market capitalisation by N579 billion to N97.772 trillion from the previous day’s N97.193 trillion.

VFD Group finished the day as the busiest stock after it recorded a turnover of 192.0 million units worth N2.1 billion, GTCO exchanged 63.5 million units valued at N5.6 billion, Access Holdings traded 49.8 million units for N1.0 billion, First Holdco sold 45.8 million units valued at N2.3 billion, and Secure Electronic Technology transacted 38.3 million units worth N28.4 million.

In all, market participants bought and sold 677.4 million units valued at N20.8 billion in 27,589 deals compared with the 451.5 million units worth N13.0 billion traded in 33,327 deals on Monday, showing an improvement in the trading volume and value by 50.03 per cent and 60.00 per cent apiece, and a shortfall in the number of deals by 17.22 per cent.