BofA sees B+ credit rating for Nigeria in 2 years on reforms

Nigeria's economic future is showing signs of promise as the country embarks on structural reforms to boost its credit rating and attract foreign investments. A recent research report by the Bank of America suggests that Nigeria could potentially see an upgrade in its credit rating to B+ within two years if successful reforms are implemented. Tatonga Rusike, Bank of America Sub-Saharan Africa Economist, discussed the key factors influencing Nigeria's economic landscape in an exclusive interview with CNBC Africa. One of the major challenges highlighted in the report is the issue of oil theft, which has been identified as a significant obstacle to Nigeria's economic growth. The report emphasizes the importance of addressing oil theft as a crucial step towards increasing oil production and boosting the country's revenue. By reducing pipeline vandalism and improving security in the oil-producing regions, Nigeria could potentially enhance its oil production to around 1.6 million barrels per day within the next two years. This increase in production could play a vital role in strengthening Nigeria's economy and attracting new investments. In addition to addressing oil theft, the report also emphasizes the significance of policy reforms to attract foreign investors. Implementation of the Petroleum Industry Act, removal of fuel subsidies, and fiscal regime adjustments are highlighted as key measures to make Nigeria's oil sector more attractive to international investors. Moreover, monetary policy reforms, including exchange rate adjustments and interest rate policies, are seen as essential to improve the country's investment climate. While Nigeria has made significant strides in implementing some of these reforms, there is still a need for more comprehensive policy changes to create a favorable environment for foreign investments. The report advocates for a transition from unorthodox monetary policies to more orthodox approaches to stabilize the economy and enhance investor confidence. Despite the challenges that lie ahead, there is cautious optimism surrounding Nigeria's economic potential in the short term. The new administration's commitment to structural reforms and the positive signals sent to international investors could pave the way for a brighter economic outlook for the country. However, it is important to note that sustainable economic growth will require sustained efforts in implementing reforms and addressing key issues such as oil theft and policy reforms. Overall, the Bank of America's report presents a hopeful outlook for Nigeria's economic future, with the potential for an upgrade in credit rating and increased foreign investments within the next two years.