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Fitch upgrades Nigeria’s credit outlook to positive, cites economic reforms

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Fitch, a global rating agency, has reviewed Nigeria’s outlook to positive from stable.

A credit rating is a measure of how likely a company or government entity can pay back its debts, based on an independent assessment of its financial health.

Fitch, in a statement on May 3, said the positive outlook partly reflects reforms implemented over the past year to support the restoration of macroeconomic stability and enhance policy coherence and credibility.

 

“Exchange rate and monetary policy frameworks have been adjusted, fuel subsidies reduced, coordination between the ministry of finance and the Central Bank of Nigeria (CBN) improved, central bank financing of the government scaled back and administrative efficiency measures are being taken to raise the currently low government revenue, as well as oil production,” Fitch said.

 

Fitch said the reforms have lessened distortions stemming from previous “unconventional monetary and exchange rate policies,” leading to the return of sizeable inflows to the official foreign exchange (FX) market.

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“Nevertheless, we see significant short-term challenges, notably, inflation is high and the FX market has yet to stabilise, and the durability of the commitment to reform is to be tested,” the credit agency said.

“The CBN has stepped up efforts to reform the monetary and exchange rate framework following last year’s unification of the multiple exchange rate windows, and the large differential between the official and parallel market rates has collapsed.

 

“Average daily FX turnover at the official FX window has risen sharply from 2H23, and there has been clearance of USD4.5 billion of the backlog of unpaid FX forwards (the validity of the outstanding USD2.2 billion is being assessed by CBN), and weekly sales of FC to bureaux de changes (BDCs) have resumed (having been suspended since 2021).”

‘RETURN OF SIZEABLE NON-RESIDENT INFLOWS’

Fitch said increased formalisation of FX activity and monetary policy tightening has contributed to a notable rise in foreign portfolio investment inflows and a fast appreciation of the naira at the official FX window.

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According to the company, this followed the 71 percent “post-liberalisation depreciation between June 2023 and mid-March 2024”.

 

However, the credit rating agency said the exchange rate remains volatile.

Fitch said the continued lack of clarity on the size of net FX reserves is a constraint on Nigeria’s sovereign’s credit profile.

‘FURTHER MONETARY POLICY TIGHTENING ANTICIPATED’

In March, the Central Bank of Nigeria (CBN) raised the monetary policy rate (MPR), which benchmarks interest rates, from 22.75 percent to 24.75 percent.

 

Fitch said it expects further increases in the CBN monetary policy rate in the second half of 2024 and “strengthening of monetary policy transmission, after the recent resumption of open market operations at rates closely aligned to the MPR”.

“We project inflation, which rose to 33.2% yoy in March due partly to exchange rate pass-through and rising food prices, to average 26.3% in 2024 and 18.2% in 2025, still well above our projected ‘B’ median of 4.5%,” Fitch said.

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In December 2023, Moody’s, a US-based rating agency, also revised its outlook for Nigeria from stable to positive.

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May 29: Tinubu orders low-key celebration of first anniversary

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The Nigerian government is going to hold a “low-key” official ceremony to mark the one year in office of President Bola Tinubu, according to the Minister of Information and National Orientation, Mohammed Idris.

 

Mr Idris stated this on Wednesday at the ministerial press briefing series held at the Radio House in Abuja.

 

It is not clear if the government intends to hold the ceremony on 12 June, the day officially recognised as Democracy Day.

 

Nigeria’s Democracy Day celebration was being held on May 29 before President Buhari changed it to 12 June in commemoration of the 12 June 1993, presidential election annulled by the military government.

 

Election data showed Moshood Abiola won the polls but he was never formally declared winner and was not sworn into office by the military government of Ibrahim Babangida.

 

Mr Tinubu, a major supporter of Mr Abiola, is believed to have played a major role in the change of the Democracy Day to 12 June.

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Speaking on the plan for the one year in office, Mr Idris said the celebration is going to focus on sectorial debates instead of the usual celebrations.

 

“The anniversary is going to be low key, there would be no major ceremony but sectorial briefing by the ministers.

 

“The essence is to ensure that government funds are kept for the people,” the minister said.

 

He said the debate would be focused on eight key sectors of the government, and that ministers would be delegated to speak on different sectors.

 

He added that the ministerial briefing series will be taking place daily with different ministers briefing on the activities in their sector.

 

The Secretary to the Government of the Federation (SGF), George Akume, had also indicated that the celebration would be low-key.

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Minimum wage: Labour refuses to shift ground, insists on N497,000, negotiation continues Tuesday

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The tripartite committee on new minimum wage has adjourned till next Tuesday, May 28 to continue deliberation after Wednesday’s meeting in Abuja ended in a deadlock again.

 

The Federal Government, the organised private sector and the organised labour failed to reach a consensus on the new minimum wage at the Wednesday meeting.

 

Sources at the meeting said that the government initially stood its ground on the N54,000 it proposed on Tuesday, citing paucity of funds.

 

However, the government was forced to propose the sum of N57,000 after the committee took a 30-minute break to make further deliberations.

 

The highly informed sources noted that at the end of the break, both the government and the OPS proposed the sum of N57,000 as minimum wage.

 

The sum was, however, rejected by labour.

 

“The final proposal from labour was N497,000 and that was after the government and the private sector proposed N57,000.

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“Initially, the government refused to shift grounds on the N54,000 it proposed earlier, noting that it didn’t have enough funds to pay. However, we took a 30-minute break to make further deliberations.

 

“We as Labour reject the proposed N57,000 and the meeting has been adjourned till Tuesday next week.

 

“Governors Obaseki and Uzodinma were present while Governor Soludo joined us via Zoom. The government needs to be serious as regards these negotiations.”

 

Also speaking, a senior official of Nigeria Labour Congress said, “The outcome of the negotiation of the National Minimum Wage Committee with the Federal Government is not encouraging. The Federal Government increased it from N54,000 to N57,000, and the organised labour moved from N615,000 to N500,000, and then to N497,000 and the meeting has been adjourned to next week Tuesday.”

 

He noted that NLC and TUC normally meet before the negotiation meetings commences “to ask ourselves the direction to go.”

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President Tinubu through Vice President Kashim Shettima, had on January 30, 2024, inaugurated the 37-member Tripartite Committee on Minimum Wage to come up with a new minimum wage ahead of the expiration of the current N30,000 wage on April 18.

 

With its membership cutting across federal and state governments, the private sector and organised labour, the panel is to recommend a new national minimum wage for the country.

 

During the inauguration of the panel, Shettima urged the members to “speedily” arrive at a resolution and submit their reports early.

 

“This timely submission is crucial to ensure the emergence of a new minimum wage,” Shettima said.

 

In furtherance of its assignment, a zonal public hearing was held simultaneously on March 7 in Lagos, Kano, Enugu, Akwa Ibom, Adamawa, and Abuja.

 

The NLC and the TUC in different states proposed various figures as a living wage, referencing the current economic crunch and the high costs of living.

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In their different proposals on the minimum wage, the NLC members in the South-West states demanded N794,000 as the TUC suggested N447,000.

 

At the North-Central zonal hearing in Abuja, the workers demanded N709,000 as the new national minimum wage, while their counterparts in the South-South clamoured for N850,000.

 

In the North-West, N485,000 was proposed, while the South-East stakeholders demanded N540,000 minimum wage.

But organised labour settled for N615,000 as a living wage.

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Good morning! Here Are Some Major News Headlines In The Newspapers Today: Naira Crisis: EFCC arrests over 200 suspects in crackdown on Bureau De Change operators

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1. The Economic and Financial Crimes Commission has arrested over 200 suspects in connection with foreign exchange scams and manipulation of the financial markets. Sources said on Wednesday that over 200 suspected Bureau De Change operators were in EFCC custody across the country.

 

2. A Federal High Court in Abuja has granted temporary bail to former Commander of the Force Intelligence Response Team, DCP Abba Kyari over his mother’s death. Justice Emeka Nwite on Wednesday ordered Kyari to deposit the sum of N50 million and a surety in like sum.

 

3. A police officer attached to the enforcement team of the Jos Metropolitan Development Board (JMDB) has been reportedly shot dead at Terminus Market, Jos, the capital of Plateau State. It was gathered that security operatives, including policemen and soldiers, have been mobilised recently by the state government to carry out enforcement against street trading in the area.

 

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4. Speaker of Cross River State House of Assembly, Elvert Ayambem, has been impeached following a vote of no confidence passed by two-third majority of the Assembly members. Hon. Effiong Ekarika representing Calabar South 1 moved the motion on the floor of the Assembly, supported by Omang Omang of Bekwara state constituency.

 

5. In commemoration of his first anniversary in office, President Bola Tinubu has directed his ministers to present their performance reports to Nigerians. The Minister of Information and National Orientation, Mohammed Idris, while announcing this at a press briefing in Abuja on Wednesday, said the low-key first-anniversary celebration would be marked with sectoral media briefings by the 47 federal ministers starting on Thursday.

 

6. The tripartite committee on new minimum wage has adjourned till next Tuesday, May 28 to continue deliberation after Wednesday’s meeting in Abuja ended in a deadlock again. The Federal Government, the organised private sector and the organised labour failed to reach a consensus on the new minimum wage at the Wednesday meeting.

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7. The House of Representatives, on Wednesday, urged the Federal Government to renovate and convert its abandoned buildings and forfeited land locally and abroad for public use. The resolution of the House was sequel to the adoption of a motion titled, “Call to convert abandoned and seized properties including buildings and lands for public use.”

 

8. The Central Bank of Nigeria (CBN) has directed all existing Bureau De Change Operators to re-apply for licences. The apex bank gave the directive in a circular issued by its Director of Financial Policy and Regulation Department, Haruna Mustafa, on Wednesday.

 

9. The Naira on Wednesday depreciated in the parallel market to N1,495 per dollar from N1,470 per dollar on Tuesday. However, the Naira appreciated to N1,462.59 per dollar in the Nigerian Autonomous Foreign Exchange Market, NAFEM.

 

10. An Oyo State High Court sitting in Ibadan, the state capital, has granted female Muslim students at the University of Ibadan International School, Ibadan (ISI) the right to wear hijab on top of their school uniforms. The court, presided over by Justice Moshood Ishola, gave the judgment on Wednesday afternoon.

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