Nigeria’s economic reforms and business dynamics

Note from the desk of Samuel Okocha, editor at 234Digest: This edition of our newsletter was meant to reach you earlier, but even the midweek holiday couldn’t clear my schedule. The past week has been packed with assignments, including some exciting reporting on Harry and Meghan’s anticipated visit to Nigeria for the UK’s Daily Mail newspaper. It’s been a whirlwind of activity, but I wouldn’t have it any other way. I’m thrilled to connect with you this Monday night here in Nigeria. Without further ado, let’s dive into the highlights.

Nigeria’s fiscal outlook shifts to positive, Fitch cites Tinubu’s reforms

Fitch Ratings has revised Nigeria’s credit outlook to positive from stable, underscoring the swift and substantial economic reforms enacted since President Bola Tinubu assumed office in May last year. The upgrade, which comes just half a year after Fitch’s initial appraisal, signals the agency’s confidence in the country’s reform trajectory.

The positive outlook is largely attributed to a series of reforms aimed at restoring macroeconomic stability and enhancing policy credibility. These measures include the recalibration of exchange rate and monetary policy frameworks, a reduction in fuel subsidies, and improved coordination between the Ministry of Finance and the Central Bank of Nigeria (CBN). Additionally, the government has scaled back central bank financing and is actively pursuing administrative efficiency measures to boost government revenue and stimulate oil production.

In a similar vein, Moody’s revised its outlook on Nigeria to positive from stable last December, recognizing the potential reversal of the country’s fiscal and external position deterioration due to the government’s reform efforts. The agency also affirmed Nigeria’s “Caa1” long-term foreign and local currency issuer ratings.

Despite these positive developments, Fitch notes that Nigeria still faces immediate challenges, including high inflation rates and an FX market that is yet to stabilize. The commitment to reform will be crucial as the nation navigates these hurdles.

Nigeria’s ‘B-’ Issuer Default Ratings (IDRs) are supported by its large economy, well-developed domestic debt market, and substantial oil and gas reserves. However, the ratings are constrained by governance issues, hydrocarbon dependence, limited oil production capacity, and ongoing security challenges. Encouragingly, there is an improvement in non-oil revenue, indicating a diversification of the nation’s economic base. Encouragingly, there has been progress in non-oil revenue, signaling a diversification of income sources.

As Nigeria continues its strategic reforms, the focus remains on sustaining momentum for long-term economic prosperity and stability

Long stories short

Oil sector’s new exit strategy: The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is offering oil giants like Exxon Mobil and Shell a streamlined process for exiting Nigeria’s onshore oil fields. By taking responsibility for oil spills and community reparations, these companies can look forward to a swifter approval process.

Binance’s court proceedings postponed: The money laundering trial involving cryptocurrency giant Binance has been adjourned to May 17. The exchange and its executives are accused of laundering over $35 million and operating without proper licensing.

Salaries uplift for Nigerian government workers: In an effort to mitigate the impact of the current cost of living crisis, the Nigerian government has announced a salary increase of 25% to 35% for its employees, retroactive from January. The lowest-paid government worker will now earn an annual salary of 450,000 naira ($323.97).

Renda’s leap forward with pre-seed funding: Renda, a burgeoning logistics startup, has successfully secured $1.9 million in pre-seed funding. This financial boost will enhance Renda’s services, support its expansion efforts in Nigeria and Kenya, and fortify its network of partnerships.

NERC implements power supply cap: In a strategic move to improve domestic power availability, the Nigerian Electricity Regulatory Commission (NERC) has mandated the grid operator to cap the power supply to international customers in Benin Republic, Niger, and Togo. This interim cap order, effective for six months, aims to minimize impacts on domestic Generation Companies’ (Gencos) supply obligations. The cap ensures that power delivery to Nigeria’s neighbors does not exceed six percent of total grid electricity at any point in time.

Quote of the Day: “You can cut all the flowers but you cannot keep spring from coming.” - Pablo Neruda

As we wrap up this edition of 234Digest, I want to express my heartfelt gratitude for your engagement and readership. We’ve journeyed through a narrative of critical economic transformations and regulatory maneuvers that are sculpting Nigeria’s commercial future. Until we meet again in our upcoming weekend edition, remain invigorated, and may your pursuits prosper as bountifully as Nigeria’s fertile earth.

Looking forward to our continued journey in the next issue of 234Digest. Wishing you a week of success and growth!