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Category: Economy

  • CBN Eyes Explicit Inflation-Targeting Framework To Enhance MP Effectiveness

    The Central Bank of Nigeria (CBN) is set to adopt an explicit inflation-targeting framework to enhance the effectiveness of its monetary policy.


    The Governor, Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso who disclosed this in Lagos while unveiling his policy direction at the Chartered Institute of Bankers of Nigeria (CIBN) bankers’ night, said that the details and requirements for this framework are currently being finalized alongside the fiscal authorities.


    He said the CBN will provide forward guidance, enhance transparency, and maintain effective communication with the public to anchor expectations and build trust among stakeholders.


    He said under the economic agenda of President Bola Ahmed Tinubu’s administration, the government has set an ambitious goal of achieving a Gross Domestic Product (GDP) of $1.0 trillion over the next seven years, with clearly defined priority areas and strategies. He said attaining this substantial target necessitates sustainable and inclusive economic growth at a significantly higher pace than current levels. The administration has already commenced this journey through fiscal reforms, including the removal of petrol subsidy and the unification of the foreign exchange market rate.   


    On achieving President Bola Tinubu’s Agenda, he  said Nigerian banks do not have sufficient capital in servicing a $1.0 trillion economy in the near future.


    He said the first step to be taking by the CBN will be directing banks to increase their capital while technology will continue to play a critical role in delivering financial services and enhancing financial inclusion.


    “Therefore, we must make difficult decisions regarding capital adequacy. As a first step, we will be directing banks to increase their capital,” he added.


    He stated that from his observation some licensees are operating outside the approved activities, breaching the boundaries set for them, insisting that any intentional or unintended non-compliance will be subject to sanctions, as operators have the responsibility to ensure that they are licensed for the activities they undertake.


    Speaking further he said “Concurrently, as we conduct a comprehensive review of the licensing framework for payment services, we will engage in extensive consultations to develop a new regulatory and compliance framework that is suitable for the technology-driven payment services sector.


    “Looking ahead for the industry, banks should reassess the responsible banking framework to ensure that the requirements are effectively integrated into their strategies. I am aware that some banks have made commendable progress in this regard.


    “The Central Bank of Nigeria is taking steps to enhance its in-house capacity so that it can assist other banks that still have progress to make in implementing their sustainability principles.


    The governor said the primary mandate of the CBN is to ensure price stability, in addition to other objectives such as issuing legal tender currency, safeguarding external reserves, promoting a sound financial system, and providing economic and financial advice to the government.


    He mentioned that  In line with CBN strategy to refocus on its core mandate, the CBN will discontinue direct quasi-fiscal interventionist activities and instead utilize orthodox monetary policy tools for implementing monetary policy.


    According to him “Our monetary policies will aim to achieve price stability, foster sustainable economic growth, stabilize the exchange rate of the naira, and reduce interest rates to facilitate borrowing and investments in the real sector. In order to ensure the proper functioning of domestic and foreign currency markets, clear, transparent, and harmonized rules governing market operations are essential.

    “New foreign exchange guidelines and legislation will be developed, and extensive consultations will be conducted with banks and FX market operators before implementing any new requirements”


    The CBN governor pointed out that the major challenges affecting the nation’s economy include high and rising inflation, inadequate foreign exchange supply, depreciation of the exchange rate, limited external reserves, weakened output, and high unemployment. These challenges according to him have led to increased interest rates, discouraging investments in productive activities.


    He said within the banking system, high inflation has affected asset quality and solvency ratios.


    Additionally, the persistent depreciation of the naira poses a significant risk for domestic banks with foreign exchange exposures.


    He assured Nigerians that while it is indeed a formidable challenge, it is not insurmountable, adding that with the right policy measures, we can overcome these obstacles and pave the way for progress and prosperity.


    He said the removal of petrol subsidy and the adoption of a floating exchange rate, among other government policies, are anticipated to have positive effects on the economy in the medium-term. These measures are expected to enhance investor confidence, attract capital inflows, stimulate domestic investment, and ultimately improve the level of external reserves. Additionally, they are expected to contribute to the stabilization of the domestic currency.


    He said despite the challenging global and domestic macroeconomic environment, Nigeria’s financial sector has demonstrated resilience in 2023, with key indicators of financial soundness largely meeting regulatory benchmarks.


    He mentioned that stress tests conducted on the banking industry also indicate its strength under mild-to-moderate scenarios of sustained economic and financial stress, although there is room for further strengthening and enhancing resilience to shocks.


    He said although the banking sector demonstrated soundness and resilience, there is still much work to be done in fortifying the industry for future challenges.


    He said in recent years, the continuous decline in Nigeria’s crude oil production has further weakened our already inadequate economic diversification. This has led to a decline in government revenue and foreign exchange inflows, while simultaneously witnessing a growth in public expenditures and a deterioration in macroeconomic indicators, which has constrained our policy options. Consequently, we have seen the fiscal deficit and public debt increase, placing additional strain on external reserves and contributing to exchange rate instability.

  • Nigeria’s Q3 GDP Grows 2.54% – NBS

    In the third quarter of 2023, Nigeria’s Gross Domestic Product (GDP) grew by 2.54 per cent (year-on-year) in real terms. This growth rate is higher than the 2.25 per cent recorded in the third quarter of 2022 and higher than the second quarter 2023 growth of 2.51 per cent.

    In its Gross Domestic Report Q3 2023, released on Friday, the statistics bureau noted that Q3 performance was driven mainly by the Services sector, which recorded a growth of 3.99 per cent and contributed 52.70 per cent to the aggregate GDP.

    The agriculture sector grew by 1.30 per cent, from the growth of 1.34 per cent recorded in the third quarter of 2022.

    The growth of the industry sector was 0.46%, an improvement from -8.00% recorded in the third quarter of 2022.

    In terms of share of the GDP, agriculture, and the industry sectors contributed less to the aggregate GDP in the third quarter of 2023 compared to the third quarter of 2022.

    In the quarter under review, aggregate GDP stood at N60,658,600.37 million in nominal terms. This performance is higher when compared to the third quarter of 2022 which recorded aggregate GDP of N52,255,809.62 million, indicating a year-on-year nominal growth of 16.08%.

    The NBS noted that in real terms the oil sector growth was –0.85 per cent (year-on-year) in Q3 2023, indicating an increase of 21.83 percentage points relative to the rate recorded in the corresponding quarter of 2022 (-22.67%). Growth also increased by 12.58 percentage points when compared to Q2 2023 which was –13.43 per cent.

    On a quarter-on-quarter basis, the oil sector recorded a growth rate of 12.47 per cent in Q3 2023.

    Nigeria recorded an average daily oil production of 1.45 million barrels per day (mbpd), higher than the daily average production of 1.20mbpd recorded in the same quarter of 2022 by 0.25mbpd and higher than the second quarter of 2023 production volume of 1.22 mbpd by 0.23mbpd.

    According to the NBS, “the sector contributed 5.48 per cent to the total real GDP in Q3 2023, down from the figure recorded in the corresponding period of 2022 and up from the preceding quarter, where it contributed 5.66 per cent and 5.34 per cent respectively.”

    The non-oil sector grew by 2.75 per cent in real terms during the period under review. This rate was lower by 1.52 percentage points compared to the rate recorded in the same quarter of 2022 and 0.84 percentage points lower than the second quarter of 2023.

    “The sector was driven in the third quarter of 2023 mainly by Information and Communication (Telecommunication); Financial and Insurance (Financial Institutions); Agriculture (Crop production); Trade; Construction; and Real Estate, accounting for positive GDP growth.

    In real terms, the non-oil sector contributed 94.52% to the nation’s GDP in the third quarter of 2023, higher than the share recorded in the third quarter of 2022 which was 94.34% and lower than the second quarter of 2023 recorded as 94.66%,” the report stated.

  • FAAC: FG, States, LGs Share N906.955bn October Revenue

    The Federation Account Allocation Committee (FAAC) has shared the total sum of N906.955 billion Federation Account Revenue to the Federal Government, States and Local Government Councils for the month of October 2023. 

    A breakdown of the amount according to a communique issued by the FAAC revealed that total distributable revenue comprises statutory revenue of N305.070 billion, Value Added Tax (VAT) of N 323.446 billion, Electronic Money Transfer Levy (EMTL) of N15.552 billion, Exchange Difference of N202.887 billion and Augmentation of N60.000 billion.  

    According to the communique, total revenue of N1,346.519 billion was available in the month of October 2023. Total deductions for cost of collection was N53.483 billion; total transfers, interventions and refunds was N386.081 billion.   

    Gross statutory revenue of N 660.090 billion was received for the month of October 2023, lower than the N1,014.953 trillion received in the month of September 2023 by N354.863 billion.  

    The gross revenue available from the Value Added Tax (VAT) was N347.343 billion, higher than the N303.550 billion available in the month of September 2023 by N43.793 billion.   

    Of the N906.955 billion, the Federal Government received N323.355 billion, State Governments got 307.717 billion and the Local Government Councils took home N225.209 billion. 

    The sum of N50.674 billion (13% of mineral revenue) was shared to the relevant States as derivation revenue. 

    From the N305.070 billion distributable statutory revenue, the Federal Government received N147.574 billion, the State Governments received N74.852 billion and the Local Government Councils received N57.707 billion. The sum of N24.937 billion (13% of mineral revenue) was shared to the relevant States as derivation revenue. 

    The Federal Government received N48.517 billion, the State Governments received N161.723 billion and the Local Government Councils received N113.206 billion from the N323.446 billion VAT revenue.

    The N15.552 billion Electronic Money Transfer Levy (EMTL) was shared as follows: the Federal Government received N2.333 billion, the State Governments received N7.776 billion and the Local Government Councils received N5.443 billion.

    The Federal Government received N93.323 billion from the N202.887 billion Exchange Difference revenue. The State Governments received N47.334 billion, and the Local Government Councils received N36.493 billion. The sum of N25.737 billion (13% of mineral revenue) went to the relevant States as derivation revenue. 

    The Augmentation of N60.000 billion was shared as follows: Federal Government received N31.608, the State Governments received N16.032 billion and the Local Government Councils received N 12.360 billion

    In the month under review, Import Duty, Petroleum Profit Tax (PPT), Value Added Tax (VAT), CET Levies and Electronic Money Transfer Levy (EMTL) increased significantly while Excise Duties and Companies Income Tax (CIT) recorded considerable decreases. Oil and Gas Royalties decreased marginally.   

  • Loans: Beware Of China, India, Saudi Arabia, IMF Warns Nigeria, Others

    The International Monetary Fund (IMF) has warned that emerging economies turning to China, India and Saudi Arabia could further increase their debt vulnerabilities.

    According to the Fund, their actions could have implications for the processes involved in debt restructuring.

    IMF Deputy Managing Director Gita Gopinath, who said this at a conference on ‘Fiscal Policy in an Era of High Debt’, noted that with global public debt tripling to about 92 percent of GDP by the end of 2022, it was important that countries begin to focus on fiscal policy as a means of navigating the debt challenge.

    She stated that rising deficits and debts in countries such as the United States have serious ramifications for emerging and developing economies, who are hit by rising rates and weaker currencies.

    The Fund added that many economies, particularly low-income countries, were already in debt distress.

    “The combination of record-high global debt levels, higher for longer interest rates, and weak growth prospects poses a triple challenge for policymakers. In a shock-prone world, very few countries will have the fiscal space to support their economies,” she said.

    To address the situation, Gopinath said countries must consider how to repay any loan collected.

    “Demands on government budgets are increasing—from delivering social support (insurer of first resort), to financing the green transition, to bolstering defense spending, to a renewed push for industrial policies and sectoral subsidies.

    “Governments need to rethink what they can and cannot do. They cannot be the insurer of first resort for all shocks. Revenues also need to keep up with spending. For our part, the IMF must balance our cautionary policy advice with an understanding of the economic and social forces underpinning these political choices.

    “Second, understand monetary and fiscal interactions. Over the past two years, central banks around the world have grappled with how to address elevated and persistent inflation levels. In several cases fiscal policy has not been in sync with monetary policy and that has complicated the fight against inflation. Much more needs to be understood about the precise mechanisms through which fiscal-monetary interactions unfold.

    “Third, evaluate vulnerabilities arising not only from public debt levels but also from the composition of debt—the identity of creditors, currency and maturity composition that apply,” she further said. 

  • More Proactive Push Needed For Central Bank Digital Currencies – IMF   

    More Proactive Push Needed For Central Bank Digital Currencies – IMF   

    The head of the International Monetary Fund (IMF) has urged countries to make a more proactive push to develop Central Bank Digital Currencies (CBDCs).

    Eleven countries, including a number in the Caribbean, and Nigeria, have already launched CBDCs. Around 120 others are exploring them, although progress and approaches differ widely and a few have even abandoned the idea altogether.

    “We may be at a point where the public sector needs to offer a little more guidance,” IMF Managing Director Kristalina Georgieva said in a speech in Singapore.

    “Not to crowd out, not to disrupt,” she added. “But to act as a catalyst, to ensure safety and efficiency – and to counter fragmentation.”

    She made her remarks as the IMF published the first instalment of a “virtual handbook” on CBDCs, designed to help countries with the design and set-up process and ensure that the new technologies are globally interoperable.

    Supporters say CBDCs will modernise payments with new functionality and provide an alternative to physical cash, which seems in terminal decline.

    But questions remain as to why they represent an advance when current systems are already capable of many of the proposed benefits, and countries such as Nigeria that have already launched CBDCs are seeing very low uptake among the public.

    Georgieva said that with technology advancing so rapidly, countries needed to push ahead with development now to avoid getting caught out in future.

    “If anything, we need to raise another sail to pick up speed,” she said, likening the efforts to a nautical journey. “The world is changing faster than most imagined”.

  • Naira Depreciates To N827.83/$1 At Official Market

    Naira Depreciates To N827.83/$1 At Official Market

    The naira again declined against the US dollar at the official market on Thursday, exchanging for N827.83 to one U.S dollar after a slight appreciation on Wednesday which saw the local currency exchanging at N818.99/$1.

    This is still a slight gain when compared to the N850.22 it recorded on Tuesday.

    However, the naira closed flat at the parallel forex market where forex is sold unofficially, the exchange rate closed at N1140/$1 as against the same N1140/$1 it quoted on Wednesday, representing 0.00 per cent, while peer-to-peer traders quoted around N1127.01/$1. 

    The intraday high recorded was N1100/$1, while the intraday low was N751.00/$1, representing a wide spread of N348.78/$1.

    Similarly, the naira also fell to the Euro, exchanging at N1,175/€1 at the parallel market, while it goes for N898.44/€1 at the official market. Also the pound sterling goes for N1,370 and N1029.7441 at the parallel and official market respectively.

    According to data obtained from the official NAFEM window, forex turnover at the close of the trading on Wednesday was $173.51 million, representing a 20.87 per cent increase compared to the previous day. 

    The local currency struggle at the foreign exchange market is coming on the heels of rising inflation in the country which saw the inflation rate jump to 27.33 per cent in October 2023 as prices of foodstuff continued to increase in the aftermath of the removal of fuel subsidy by the President Bola Tinubu administration.

    This was according to the October 2023 Consumer Price Index (CPI) and Inflation Report released by the National Bureau of Statistics (NBS) on Wednesday.

    The CPI, which measures the changes in the prices of goods and services, rose from 26.72 per cent to 27.33 per cent showing an increase of 0.61 per cent points.

    “In October 2023, the headline inflation rate increased to 27.33 per cent relative to the September 2023 headline inflation rate which was 26.72 per cent,” the report partly read.

    “Looking at the movement, the October 2023 headline inflation rate showed an increase of 0.61 per cent points when compared to the September 2023 headline inflation rate.

    “Furthermore, on a year-on-year basis, the headline inflation rate was 6.24 per cent points higher compared to the rate recorded in October 2022, which was (21.09 per cent).

    “This shows that the headline inflation rate (year-on-year basis) increased in October 2023 when compared to the same month in the preceding year (October 2022).”

  • Food To Drive Nigeria’s Inflation Trend, Says Firm

    Food To Drive Nigeria’s Inflation Trend, Says Firm

    CAPE Economic Research and Consulting has stated that food inflation will continue to drive inflation in Nigeria.

    In its Economic Newsletter for November, which was made available to NATIONAL ANCHOR on Friday, the economic think- tank said headline food and core inflation are expected to rise to 27.41, 31.01, and 22.50 percent respectively.

    While noting that inflation would heighten though at a moderate pace, the firm said the impact of food prices and exchange rates may play a strong role.

    “However, housing and utility prices had a more robust impact in October 2023 than in September 2023. This suggests that the impact of an increase in energy prices and exchange rate continues to permeate into the economy and would continue to reflect over a 12-month period at the least, through a base effect,” it said.

    On the Federal Accounts Allocation Committee (FAAC) allocation, the research firm noted that there may be a moderation in FAAC distribution for October 2023 adding that it may not dampen inflationary pressure significantly.

    “The Federation Account Allocation Committee (FAAC) distributed the total sum of N903.48 billion among the three tiers of government in the month of October 2023 for revenue collected in September 2023. The amount distributed was lower than the N923.01 billion shared in September 2023 by N19.53 billion representing a decrease of 2.1 per cent.

    “A further breakdown shows that the Federal Government received N320.54.25 billion; States, N287.07 billion Local Government, N210.90 billion. Thirteen percent derivation fund distributed among beneficiary states amounted to N84.97 billion. Revenue allocation to all the three tiers of government generally declined in October 2023 except for the 13 percent derivation fund.

    “The decline was driven by the shortfall in non-oil. receipts, particularly, Companies Income Tax (CIT), Import and Excise Duties, and Value Added Tax (VAT). Collections from Petroleum Profit Tax (PPT), and Oil & Gas Royalties increased during the period,” it said.

  • Russia-Ukraine Crisis Affecting Demand For Nigeria’s Crude, Says NNPCL

    The Nigerian National Petroleum Company Limited (NNPCL) has provided insight into how the lingering conflict between Russia and Ukraine has impacted Nigerian crude oil inflows in the international oil market, leading to a dip in demand from the once-dependable Asian market at the onset of hostilities in the Eastern bloc.

    Maryamu Idris, Executive Director, Crude & Condensate, NNPC Trading Limited, who said this in a panel presentation at the Argus European Crude Conference in London, added that that the substantial price shocks impacting commodity and energy prices globally, the conflict between Russia and Ukraine has triggered a situation where India, a primary destination for Nigerian grades, increased its appetite for discounted Russian barrels to the detriment of some Nigerian volumes.

    “To illustrate the extent of this shift, Nigeria’s crude exports to India dwindled from approximately 250,000 barrels per day (bpd) in the six months preceding the February 2022 invasion of Ukraine to 194,000 in the subsequent six months afterwards. And so far, this year, only around 120,000 bpd of Nigerian crude volumes have made their way to India,” she said.

    On the other hand, she noted that the Nigerian crude flow to Europe has increased in a bid to fill supply gaps left by the ban on Russian crude, pointing out that six months before the war, 678,000 bpd of Nigerian crude grades went to Europe, compared to 710,000 bpd six months later and 730,000 bpd so far this year.

    “This trend makes it evident that Nigerian grades are increasingly becoming a significant component in the post-war palette of European refiners. Several Nigerian distillate-rich grades have become a steady preference for many European refiners, given the absence of Russian Urals and diesel. Forcados Blend, Escravos Light, Bonga, and Egina appear to be the most popular, and our latest addition — Nembe Crude – fits well into this basket. This was a strong factor behind our choice of London and the Argus European Crude Conference as the most ideal launch hub for the grade,” Idris also said.

    On production challenges, Idris remarked that, like many other oil-producing countries, Nigeria had faced production challenges aggravated by the COVID-19 pandemic, including reduced investment in the upstream sector, supply chain disruptions impacting upstream operations, ageing oil fields, and oil theft by unscrupulous elements. These factors, she said, contributed to production declines in the second half of 2022 and early 2023.

    Idris, however, noted that the challenges are fast becoming a thing of the past with the introduction and implementation of a new framework for the domestic petroleum industry (the PIA of 2021), rejuvenating the business landscape, and re-positioning NNPC Limited to adopt a more commercial approach to the management of the nation’s hydrocarbon resources.

    According to her, NNPC Limited has secured vital partnerships with notable financial institutions to promote upstream investments to restore and sustainably grow production capacity in the coming years.

    “NNPC Limited is championing concerted efforts in partnership with host communities and private stakeholders to address the security and environmental challenges in the Niger Delta to further fortify production growth. Suffice to say we have already begun seeing significant progress on the rebound. In September 2023, Nigeria recorded its highest crude oil and condensate output in nearly two years, reaching 1.72 million barrels per day. This, we believe, is just the beginning of our production rebound.”

    She affirmed that in addition to sustainably growing upstream production volumes, NNPC Limited is also increasing its participation in the downstream sector in line with a ‘wells-to-wheels’ approach, taking the country’s unique hydrocarbon molecules as close as possible to end-users.

    The vehicle for this, she said, is the restructured NNPC Trading Company, focused on growing NNPC’s presence in the global market for crude, condensate, gas, and petroleum products.

    The Argus Crude European Crude Conference Panel Session was held with the theme, ‘The Invisible Hand: How Are Shareholders and Asset Managers Meeting the Crude Industry? What Does This Mean for the Future of Crude in Europe?’

    Vice President Crude of Argus, James Gooder, moderated the event.

  • Naira Rallies Across Markets, Trades Below N900/$1 At P2P

    For the first time since August 2023, the exchange rate dipped below the N900 to $1 mark on peer-to-peer (P2P) platforms, including Binance, indicating a robust turnaround for the Naira.

    Data from the acclaimed Binance Crypto trading platform showed the exchange rate at an impressive N855 to $1. This development highlights the naira’s impressive recovery trajectory.

    The black market, often regarded as an unofficial gauge of the currency’s vigour – has listed exchange rates ranging from N1000 to N1,100 for $1 in cash transactions.

    Several black market dealers shared the sentiment that the naira’s rally might be linked to the recent influx of positive news reports, notably those highlighting the government’s progress in clearing forex backlogs.

    A black market operator, requesting anonymity, mentioned that the market may be transitioning from ‘panic buying’ to ‘panic selling,’ a stark reversal of the previous trend.

    On the official front, the Nigerian Autonomous Foreign Exchange Market (NAFEM) witnessed the Naira closing at an encouraging N776.14, marking its strongest finish since October 13th of the current year, a notable improvement from the preceding day’s close of N793.2.

    The breakthrough below the N900 threshold on the p2p market is being celebrated as a considerable psychological triumph by Nigerian government officials and their surrogates on social media.

    The Naira commenced the week trading at N1,110 last week Monday, experienced a slight dip to N1,180 on Tuesday, and then exhibited a positive trend on Wednesday and Thursday, closing at N1,175 and N1,125, respectively.

    The most astounding surge occurred last Friday, with the Naira selling at N950/$.

    Naira rebound may not be unconnected with augmented foreign exchange inflows, deft policy interventions by the Central Bank of Nigeria (CBN), and stringent measures against illegal financial activities.

    It would be recalled that the CBN focused on Tier 2 Nigerian banks and international banks with over 75 to 80 per cent of the foreign exchange forward contracts obligations cleared.

    Findings show that Citigroup ($72 million), Stanbic ($125 million), and Standard Chartered ($63 million) are among the companies that are receiving forex futures deliveries last week

    The FG also stated that it expected to spend $10 billion to settle FX obligations, support the country’s FX market, and stabilize the naira.

    Minister of Finance Wale Edun, said that forex liquidity will improve in the coming weeks.

    He further highlighted that discussions with sovereign wealth funds willing to invest and provide advances along with investments are in advance phases.

    A US multinational financial services firm, JP Morgan, on Wednesday projected that the naira would trade at N850/$ at the Investors’ and Exporters’ forex window before the end of 2023.

    However, the US bank said the recent efforts to restore a flexible forex regime may be sustained given the willingness to accompany it with tighter monetary conditions.

  • Fitch Applauds Tinubu’s Reforms, Affirms Stable Credit Ratings 

    Fitch Applauds Tinubu’s Reforms, Affirms Stable Credit Ratings 

    Fitch Ratings has affirmed Nigeria’s long-term foreign currency credit default outlook at B, citing recent policies by President Tinubu as responsible for the stable outlook.

    It also raised concerns over the proposed $10 billion forex loan which the government plans to use to offset forex backlogs and inject liquidity into the system.

    This is from its latest rating outlook commentary on the Nigerian economy. The global credit ratings agency noted that reforms such as fuel subsidy removal and the new exchange rate framework were responsible for the stable outlook.

    On the strengths and weaknesses of the Nigeria economy, the agency noted “Nigeria’s ‘B-‘rating is supported by a large economy, a developed and liquid domestic debt market, and large oil and gas reserves.

    The rating is constrained by weak governance, structurally very low non-oil revenue, high hydrocarbon dependence, security challenges, high inflation, low net FX reserves, and ongoing weakness in the exchange-rate framework.”

    Fitch raised concerns about the recent government announcement to secure $10 billion in foreign exchange, highlighting the absence of specific information, such as whether this amount encompasses World Bank budget support loans totaling $1.5 billion.

    It stated, “we forecast a broadly flat current account surplus, averaging 0.5 per cent of Gross Domestic Product (GDP) in 2023-2024. There is a lack of detail on a recent government announcement to raise $10 billion of forex, including whether this includes World Bank budget support loans of $1.5 billion.

    Following the sharp depreciation this year, Fitch assumes exchange-rate adjustments proceed more gradually in subsequent years.”

    However, it said signs of backtracking on reforms such as “a lower degree of price discovery in the foreign exchange (forex) market than in late June” and recent revelation from the nation’s apex bank which suggests that foreign reserve is significantly lower than publicly acknowledged.

    The agency also noted that the country’s public debt, excluding Central Bank of Nigeria loans, has a relatively extended average maturity of 9.7 years.

    Beyond that, the agency said the scarcity of foreign exchange is hindering economic activities in the country and impeding the flow of foreign capital and the CBN’s net foreign exchange position is lower than understood according to its financial statement published in August.

    Going further, the agency explained that Nigeria’s growth in 2024 will be spurred by an increase in crude oil production, a reduction in budget deficit freeing resources for capital expenditure, non-oil revenue growth, etc. But it highlighted Nigeria’s macro-economic challenges to include; high inflation which it projects to drop to 21.1% in 2024, and a high interest rate.