Tinubu’s Reforms: S&P Upgrades Nigeria’s Outlook to Stable

*Analysts warn country may face geopolitical risks over Niger
 *GlaxoSmithKline’s exit, bad omen for Nigeria’s business environment, Atiku, Obi lament

Ndubuisi Francis and Gabriel Emameh in Abuja

Global rating agency, Standard and Poor’s (S&P) has upgraded Nigeria’s credit outlook to stable from negative on President Bola Ahmed Tinubu’s planned reforms.

However, despite the improved rating, the debt assessor still scored Nigeria at B-, six notches into junk and on par with Bolivia and Barbados.
It also warned that Nigeria may also face geopolitical risks tied to the recent coup in neighboring Niger.
This is coming as the presidential candidate of the Peoples Democratic Party (PDP) in the 2023 general election, Atiku Abubakar, and his counterpart in the Labour Party (LP), Peter Obi have lamented the planned exit of the British pharmaceutical giant, GlaxoSmithKline (GSK), from Nigeria after more than five decades of operation.

Both opposition leaders said the development was a sign that all is not well with the country’s business environment.
In a statement, S&P Global Ratings acknowledged that the improved outlook comes after Nigeria’s new leader scrapped costly fuel subsidies, removed the Governor of the Central Bank of Nigeria (CBN), and overhauled the nation’s exchange rate policies.
According to analysts, Ravi Bhatia, Samira Mensah, and Juili Pargaonkar, “the new government is moving ahead with a series of reforms that could, if delivered, benefit growth and fiscal outcomes.”

 
“We believe these measures will gradually benefit Nigeria’s public finances and its balance of payments,” the analysts added.
However, the analysts noted that Nigeria’s planned fiscal spending and inflation remain high, adding that Nigeria and other countries in the West African region may also face geopolitical risks tied to the recent coup in neighboring Niger.

The World Bank had projected that Nigeria could save up to N3.9 trillion this year alone from reforms but warned of growing short-term inflationary pressures.
 S&P’s sovereign analyst, Frank Gill had last month stated that the ratings agency was closely watching Nigeria ahead of its review on August 4, adding that recent reforms were positive signs.

The global rating agency had in February maintained Nigeria’s credit rating at “B-/B” but changed its outlook to “negative”, while rival Fitch affirmed Nigeria at ‘B-’ in May.
A raft of measures taken by Tinubu soon after his inauguration on May 29, including the removal of the contentious subsidy on petrol and the unification of the exchange rate of the naira is already ruffling feathers.

Although multilateral lenders, the International Monetary Fund (IMF); the World Bank, and foreign investors, among others, have hailed the measures, most Nigerians are currently facing unprecedented hardship caused by the high cost of living due to subsidy removal.
The organised labour is currently embroiled in a face-off with the federal government over subsidy removal without putting measures in place to cushion the impact on vulnerable Nigerians.