Fitch Cuts short Nigeria’s GDP Forecast in 2017



Monday, December 11,2017

F itch has cut its 2017 economic growth forecast for Nigeria to 1% from 1.5%, the ratings agency said. Nigeria returned to growth in the second quarter of 2017 after shrinking by 1.5% in 2016 but the recovery has been fragile because oil revenues remain depressed and hard currency is short.

Speaking at a Fitch event in London, Jermaine Leonard, a director for sovereigns, added that although Nigeria’s 2018 budget had an oil production target of 2.3 million barrels per day, the Fitch forecast was just above two million bpd, NAN reported.

Partly this was linked to a potential flare up in violence in the Niger Delta as elections approach in 2019, he said.

Fitch currently rates Nigeria at B+ with a negative outlook, which reflected the fact that there were still a lot of elements which could take it down, said Leonard. “But at this point we are cautiously optimistic,” he said. The country is moving ahead with plans to borrow $5.5 billion from foreign investors aiming to plug a large gap in Nigeria’s finances that stem in part from the global fall in oil prices.

Equity markets are also buoyant, having hit three-year highs this week for 2017 gains of around 45%.

Reviving Companies

Determined to significantly boost the contribution of the non-oil sector to Nigeria’s GDP, the Central Bank of Nigeria has said it plans to revive moribund firms in the non-oil export business through its N500 billion ($1.4 billion) export stimulation facility.

CBN governor, Godwin Emefiele, disclosed this plan Friday night when he spoke with journalists after meeting with stakeholders in the non-oil export business.

Also, at the ninth annual bankers’ committee retreat on Saturday, Emefiele urged management of deposit money banks and other members of the Bankers’ Committee to ensure that they focus on initiatives that would touch the lives of Nigerians and contribute significantly to the country’s GDP.

The governor explained that the purpose of the meeting with the exporters and the banks was to look at areas the CBN could support the activities of exporters in the country to boost earnings from the sector.

“The basic issue is that we have decided to bring back to the table the N500 billion Export Stimulation Facility that we had proposed two years ago, as well as the N50 billion Direct Intervention Fund from the Nigeria Export-Import Bank.

“We also know that there are some of the Nigerian companies that have benefited from some of our export stimulations facilities in the past and some of them still remain moribund, and we have also told our Development Finance Department to take a look at companies like Multi-trex and another company that is also into cocoa processing that is somewhere in Ibadan.

“We are going to be working with them to see that we really get their production back on track. By doing this we are going to be creating more jobs for our people.

“Other than just creating jobs, we will see that it will afford opportunity to increase our export earnings for the good of the country because those export earnings are also necessary,” he said.

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