FG: Nigeria’s Downgrade by Credit Rating Agencies Not in Line with Current Realities

•Seeks UN’s support on next year’s elections, census 

•Global body urges caution on subsidy 

•Nigeria’s foreign trade declined by N1.24trn in Q3  

•Crude oil exports accounted for N4.66trn, non-crude oil N1.28trn, non-oil products N438bn

Ndubuisi Francis and James Emejo in Abuja

The federal government has lamented the impact of the recent downgrade of Nigeria by global credit rating agencies, saying the ratings were posing some difficulties for the country in terms of cost of funds at the international market.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed stated this in Abuja, yesterday, during a visit to her ministry by the Deputy Director General of the United Nations (UN), Mrs. Amina Mohammed, also called for the international bodies to reverse a situation where African countries borrow at higher cost than their European counterparts.

Ahmed made these remarks on same day the National Bureau of Statistics (NBS) disclosed that Nigeria’s total merchandise trade decreased by about N1.24 trillion to N11.60 trillion in the third quarter of the year (Q3 2022) compared to N12.84 trillion in the preceding quarter.

In quick succession in November, Moody’s and Fitch Ratings downgraded Nigeria. Moody’s downgraded Nigeria’s local currency and foreign currency long-term issuer ratings as well as its foreign currency senior unsecured debt ratings to B3 from B2.

Fitch Ratings also downgraded Nigeria’s long-term foreign currency Issuer Default Rating (IDR) to ‘B-’ from ‘B’, pegging Africa’s biggest oil producer, six notches above default, and at par with Ecuador and Angola.

Briefing the visiting UN deputy scribe on the strides and challenges of the Buhari’s administration, Ahmed said the challenge of COVID-19, the war in Ukraine and Climate Change were not caused by Nigeria.

According to her, the cost of quantitative easing, high inflation and high interest rates, among others, across the world were global challenges, regretting that despite the fact that this reality, the rating agencies went ahead to downgrade Nigeria.

“We are coping with a lot and we are doing the best we can under very difficult circumstances. But to have to cope with credit rating agencies working as if nothing has changed, not realising the kind of shocks we are facing, and assessing us and downgrading us for factors external to us even when we are putting our best efforts.

“We think it is a situation we realise we can’t change. In this ministry, we engage every credit rating agencies and provide everything they ask for.

“But it seems as if it is not enough. They have to be some support that we need to get. They themselves need to do things differently.

“You cannot be making the same kind of assessments you were making some time ago. Things are different. Things are not going. We have seen some of our sister countries really hurt.

“This year only, we have had Nigeria being downgraded, and unless these interventions are done at a very high international level, countries that are developing will be the ones that would carry the brunt of this attidue of the credit rating agencies.”

The minister called for the support of the UN as Nigeria goes into its general elections and population census next year.

She thanked United Nations Population Fund (UNFP) for its assistance for the National Population Commission (NPC).

She said: “We have a national census plan. the UNFP has embed a special adviser that is working with the population commission. A proclamation has been done been done by President that census will be carried out in April, after the elections.

“We are asking the UN for support and funds it will be very tasking on the federal government budget. We have elections and census that are very expensive so we really do need these interventions now.”

Responding, the UN deputy scribe urged caution on the removal of fuel subsidies because of its wide implications.

Noting that subsidy was hugely important to the economy, she however advised that it should be handled with care, “targeting effectively what one believes is important for people to understand that those perceived gains from subsidy are actually going to translate into their lives towards reducing poverty ensuring our women and youths have jobs.”

Nigeria’s Foreign Trade Declined by N1.24trn in Q3

Meanwhile, Nigeria’s total merchandise trade decreased by about N1.24 trillion to N11.60 trillion in the third quarter of the year (Q3 2022) compared to N12.84 trillion in the preceding quarter, the National Bureau of Statistics (NBS) said yesterday.

The export component of trade dropped to N5.93 trillion, representing 19.89 per cent decline over the preceding quarter and accounted for 51.16 per cent of total trade in the review period.

According to the Foreign Trade in Goods Statistics for Q3 2022, which was posted on its website, total imports, however, increased by 4.22 per cent to N5.66 trillion in Q3.

According to the statistical agency, imports accounted for 48.84 per cent of total trade. As a result, the balance of trade in the period under review stood at N269.34 billion.

It also showed that exports trade was dominated by crude oil exports valued at N4.66 trillion, representing 78.51 per cent of total exports while non-crude oil exports stood at N1.28 trillion or 21.49 per cent of total exports.

Non-oil products contributed N438.00 billion representing 7.38 per cent of total exports, the NBS stated.

Crude oil exports in Q3 however, decrease by 21.15 per cent compared to Q2 while other oil products exports was N837.33 billion, representing a marginal increase of 1.68 per cent compared to N823.48 billion in Q2.

Nigeria’s top five export destinations were Spain with a share of 14.72 per cent, followed by India with 10.44 per cent, France 7.25 per cent, the Netherlands and Indonesia with 7.09 per cent and 7 per cent respectively.

In monetary terms, Spain contributed N873.62 billion while India, France, The Netherlands, and Indonesia accounted for N619.22 billion, N430.40billion, N420.41 billion and N415.16 billion of export trade respectively. These five countries collectively accounted for 46.49 per cent of the value of total exports valued at N5.93 trillion in Q3.

The commodity with the largest export values in the period under review was ‘petroleum oils and oils obtained from bituminous minerals, crude’ with N4.65 trillion, representing 78.51 per cent, followed by natural gas, liquefied with N757.36 billion accounting for 12.76 per cent, and urea, whether or not in aqueous solution N133.17 billion or 2.24 per cent of total exports.