The Minister of Information, Nigeria has restated that the national economy is in good health in spite of some drop recorded in revenue inflow in recent times.
Maku gave this state of the economy picture at a World Press Conference held today, Tuesday, 22 October, 2013 at the National Press Centre, Radio House, Abuja.
Maku disclosed that "Over the last week, two global credit ratings agencies – Fitch and Standard and Poor's, have both affirmed Nigeria's sovereign credit ratings at BB minus, with a stable outlook."
The Information Minister described the credit rating done by the rating agencies as "an evaluation of the creditworthiness of a sovereign state or nation, and is a key determinant of the interest rate at which such a country (and its private sector) can borrow on international financial markets. It also indicates the level of risk of investing in a country and, is therefore monitored closely by foreign investors."
Maku revealed that the the positive rating of the Nigerian economy was based upon "the solid macroeconomic performance – including low fiscal and external debt positions, lower inflation, ample foreign reserves, and strong non-oil GDP growth, as major contributory factors to this recent rating, while also recognizing challenges like oil theft and infrastructure shortfalls."
The spokesman for Nigeria's Federal Administration also decoded the implication of this positive attestation to the health of Nigeria's economy as that: "the private sector can continue to raise finance at cheap rates on international credit markets. More specifically, Nigerian banks can borrow money at cheaper rates abroad in order to "unlend" to local private enterprises." "In addition, the ratings should uphold Nigeria's attractiveness for foreign investment, especially since the country has been the number one investment destination in Africa over the last two years."
Additional significance of the credit rating, especially for Nigerian banks and their customers, according to Maku, can be seen in a number of Nigerian banks which recently went to raise funds abroad, e.g. Access Bank ($350 million Euro Bond), GTB ($350 million Euro Bond) and Fidelity Bank ($300 million Euro Bond)".
Maku also highlighted the fact that given the positive credit worthiness of the Nigerian economy, "International Investors are now more interested in Nigeria." He gave the example of "about $7 Billion" which "was invested in Nigeria by foreign investors in 2012."
Labaran Maku said, the newfound health of the Nigerian economy could not have been possible if not for the economic re-engineering of the present administration. He said, "Government's efforts at diversifying the economy and creating jobs continue to pay off"; as well as "In the Agriculture sector, over 2.7 million jobs have been created across 9 crop value chains, including rice and cassava"; and the revenue from the reforms in the electricity sector was also mentioned: "The Nigerian electricity sector, has recorded another major milestone. As of today, the administration has successfully sold the 15 successor generation and distribution companies and has realized a total of $2.07 billion. An initial payment of 25% was made earlier in the year and the balance of 75% completed during the third quarter of 2013."
The Information Minister also gave further indices for the positive development of the Nigerian economy: "Dollar exchange rate has been between ₦155 and ₦160 over the last two years; inflation dropped to 8% in September, 2013 from 12.4% in May, 2011; and external reserve increased from $32.08 billion in May 2011 to $48.4 billion as of May 2013."
Additional indices which Maku pointed to for the growth in the Nigerian economy include: excess crude account which rose from about $4 Billion in May, 2011 to about $6 billion in May, 2013.
Maku also disclosed that the Federal Government deliberately reduced cost of governance by adopting a policy to reduce recurrent expenditure and complete unfinished capital projects; thus making Nigeria's Federal recurrent expenditure to drop from 74.4% of total budget in 2011 to 68.7% in 2013. This, he said was done through the "Envelope system" which was developed to enable Ministers prioritize uncompleted capital projects.
Source: Maku at World Press Conference restates the health of national economy (http://www.nigeria.gov.ng/2012-10-29-11-09-25/news/596-maku-at-world-press-conference-restates-the-health-of-national-economy)