S&P affirms Nigeria’s rating at B/B; outlook stable

Nigeria's economic outlook received a positive boost as Standard and Poor's (S&P) reaffirmed its rating at BB with a stable outlook. Gardner Rusike, a Sovereign Risk Analyst at S&P, explained that improvements in the country's oil sector are expected to support higher economic growth. The recent report by S&P highlighted key factors influencing Nigeria's rating decision. Despite facing challenges in the past year with lower oil production and a recession, Nigeria is showing signs of improvement in 2017. Oil production has rebounded, and the overall economic situation is slowly but steadily getting better. While the Central Bank has been able to build up reserves, there is still room for further growth and improvement in Nigeria's economic growth and external position. The affirmation of the ratings reflects the progress made by Nigeria, but also underlines the need for continued growth and stability. One critical aspect highlighted in the report is Nigeria's real GDP per capita growth, which is still below desired levels. Economic growth needs to outpace population growth for sustainable development. Nigeria's rating has experienced a downgrade in recent years due to low growth rates. To achieve a higher rating, Nigeria needs to aim for growth rates comparable to historical levels, ideally around 3-5%. Additionally, security risks remain a concern in Nigeria, with sporadic attacks from groups like Boko Haram and tensions in various regions. While there has been a decrease in the frequency of attacks, these threats continue to impact the country's overall stability. Looking ahead, Nigeria's economic indicators are showing improvement, including stable FX markets and increased oil production. The projection for 2017 stands at around 1% growth, considering the current trends in oil production and agriculture. The expected growth is supported by the potential increase in FX inflows, which can boost various economic sectors and contribute to overall growth. In the medium term, Nigeria could see growth rates between 3-4%, driven by sustained improvements in oil production and FX inflows. Overall, the reaffirmation of Nigeria's rating and outlook by S&P signals a positive trajectory for the country's economy. However, continued efforts are needed to maintain this momentum and achieve higher growth rates in the future.