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Fitch affirms Nigeria’s ‘B+’ ratings, outlook negative



        …says 2019 elections threaten FG’s reform agenda


  • Nigeria’s banks highly profitable despite headwinds

Fitch Ratings yesterday affirmed Nigeria’s long-term foreign currency Issuer Default Rating (IDR) at ‘B+’ with a “negative outlook”. In a statement yesterday, the international rating agency explained that the ‘B+’ rating: “reflects Nigeria’s position as Africa’s largest economy and most populous country, its net external creditor position, and its well-developed domestic debt markets, balanced against a high level of hydrocarbon dependence, low levels of domestic revenue mobilisation and GDP per capita, and low rankings on governance and business environment indicators.”

Besides, it stated: “The negative outlook reflects uncertainty about the sustainability of the economic growth momentum as the impact of earlier shocks eases and progress on addressing high interest service ratios.”

The rating agency forecasts Nigeria’s GDP growth to accelerate to 2.4per cent in 2018, noting that growth turned positive in 2Q17, and the recovery of oil production, to 2.1 million by 4Q17, boosted oil sector output.

It noted that greater FX availability provided a lift to the non-oil export sectors, particularly agriculture, stating that while it expects that these trends will continue, “tight monetary conditions will continue to weigh on Nigeria’s growth outlook.”

While Fitch forecasts Nigeria’s 2019 growth to rise slightly to 3.0per cent, compared with 4.8per cent for the five years prior to 2016, it, however, warned that the general election scheduled for February 2019 could further weaken progress on the Federal Government’s economic reform agenda and aggravate ongoing security challenges. Specifically, the rating agency said: “Most importantly, any flare-up of insurgent activity in the oil-producing Niger Delta would hit fiscal and external revenue.

In 2016 and 2017, increased insurgent activity caused a fall in oil production to a low of 1.7mbpd.” Furthermore, Fitch noted that while Nigeria’s banking sector has been boosted by the easing of foreign-currency liquidity, “economic headwinds, combined with high loan concentration, have eroded asset quality and capital adequacy.

“The ratio of non-performing loans to total loans increased to 15.1per cent in 3Q17 from 5per cent in 2015, although pressures are likely to ease in 2018 and provisioning coverage is fairly healthy. Capital adequacy fell to approximately 10.6per cent in 3Q17, from 18per cent in 2015. Tight monetary conditions have weighed on credit provision and credit to the private sector contracted by 3.7per cent in 2017. Nevertheless, the sector remains highly profitable and that is not expected to change,” it added.

The agency emphasised that the government’s inability to substantially increase domestic revenue mobilisation remains a key rating weakness. It pointed out: “Non-oil revenue increased slightly in 2017, to 3.4per cent of GDP and will continue growing slowly as a result of new revenue measures and efforts to increase the tax base, but any increase comes from a very low base. As a result, general government debt as a percentage of revenue will increase to 311per cent in 2018, compared with the ‘B’ median of 240 per cent. The ratio of Federal Government of Nigeria (FGN) debt to FGN revenue is even higher, estimated at 623per cent as of end-2017.

However, relative to GDP, general government debt will be only to 20.5per of GDP in 2018, well below the ‘B’ median of 61.5per cent. Predicting that the general government fiscal deficit will contract only slightly to 4.2 per cent of GDP in 2018, from an estimated 4.6per cent in 2017, Fitch noted that the government’s attempts at fiscal consolidation have been hampered by low levels of tax coverage and compliance, rigidities in Nigeria’s budgeting framework, and consistent delays in approving budgets.

“The forecasts are based on a conservative oil price assumption of USD57.5/b, so a higher oil price could reduce the deficit significantly, if the windfall is not directed towards spending,” it stated.

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TCIP Customs explains cargo clearance delays at port



The Tin Can Island Command of the Nigeria Customs Service has said the recent in cargo clearance being witnessed by importers and Customs Brokers at the Apapa and Tin Can Island Ports in Lagos is because the NCS Internet Server was down thus impeding cargo documents processing.

This was disclosed by the Tin Can Island Customs Public Relations Officer, CSP Tony Ejesieme during a chat with the Sunday Telegraph on Wednesday at the port city of Apapa.

Ejesieme noted that the internet network breakdown as experienced by the Service could cause delay at anytime and was not the fault of the NCS but that of a bad weather.

The PRO, who admitted that there was delay in cargo release, said the command had not captured any importers for cargo release but was optimistic that the network would surge back and cargo clearance processing would commence immediately.

“We have not been able to work since morning as no importers have been captured. This is another delay; issuing debit note has become a problem. But the network will certainly come back and we will commence work immediately,’’ said he.

According to him, the major reasons for delay were non-compliance with import guidelines, wrong classification and declaration by importers, and lack of working scanners.

He, however, absolved the Service of any complicity and maintained that the NCS works based on procedure. ‘’Whatever we are doing is based on procedure and in accordance with the import laws. It is true that there is delay; if there are issues of infraction, there will be delay,’’ he said.

Ejesieme also caused by lack of scanners, saying that all scanners in all the ports in Lagos have broken down completely except only one in Apapa which could not handle all cargo in the port and that is why many cargos are routed to physical examination.

‘’Scanners are not working; only one is working in Apapa, no one in Tin Can. The issue of scanners has to be settled and we have engaged government on it.’’

Advising importers and customs agents to adhere to the import guidelines, he said that the security of nation as the nation approaches the general elections in 2019 would not be compromised as the Service is working with other government agencies to protect the territorial boundaries of the nation.

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UBA Foundation reading through regions in Africa



As part of its mission to improve the lives of communities in which the United Bank for Africa operates, UBA Foundation said it has continued to encourage African youths to adopt the culture of reading through its ‘Read Africa’ initiative.

Read Africa aims to rekindle the reading culture amongst young Africans. Designed and introduced in 2011 by the UBA Foundation, the initiative has donated hundreds of thousands of books to African schools since its inception.

This past week, The Foundation took its initiative to the francophone city of Libreville to the students of the George MABIGNATH high school in Gabon.

The launch of Read Africa in Gabon saw in attendance, the author of the selected book Sidonie, written by famous Gabonese writer Chantal Magalie MBAZOO.

It was a colorful ceremony that witnessed the CEO of the Foundation, Bola Atta reading to and interacting with the students in high energy in the presence of their Principal, Mrs. Boudounghou Biboutou Isabelle and other staff members.

Bola Atta summarized the Foundation’s initiative saying, “At the UBA Foundation, we are committed to improving the lives of the youths on the continent and one of the ways we can achieve this is to help you read more. I am here to talk to you a little about the importance of reading and how it can radically change your life. Reading encourages you to dream, it expands your knowledge, your vocabulary. It is a path to achieving your ambitions”.


Chioma Mang, the CEO of UBA Gabon also reiterated the mission of UBA and emphasized the bank’s commitment to the Gabonese community. “ I love children and I am happy to be here with you all today. I’d like to encourage you to read very well so that you can reach great heights in your life like me. UBA is going to be there for you all the way. You can count on us”, she said.


The Read Africa initiative then moved on to Zambia to the Horizon Secondary School in Lusaka where the Director in the ministry of higher education in charge of Vocation, Education and Training, Mr. Alex Simumba, thanked UBA and the Foundation for the good work that is being done across Africa. He said, “To UBA Foundation, we thank you for your support to the institution today. We welcome this and many more collaboration in the field of literacy and other higher education programmes. We also further encourage other private sector organisations to take a keen interest in such programmes because the youths who are receiving these literary materials will be benefitting greatly from them,” he said.


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Shell has disbursed N1.88bn to GMoU clusters in Delta State




The General Manager, External Relations, SPDC, Mr. Igo Weli has said that Shell Petroleum Development Company, (SPDC) is still active in Delta State noting that the oil giant has executed a lot of projects in the state.

According to him, the oil giant has disbursed a total sum of N1.88 billion to Global Memorandum of Understanding (GMoU) in clusters.

Igo Weli, who disclosed this when he spoke with newsmen in Warri on Thursday, revealed that the GMoU funding covers the three clusters currently active in Delta State since the inception of the concept in 2006, adding that Cluster Development Boards (CDBs) like their counterparts in other parts of the Niger Delta, are implementing health and educational projects among others.

During the media presentation of the 2018 Shell Nigeria Briefing Notes to Journalists, he also disclosed that Shell has established a Professorial Chair at the Federal University of Petroleum Resources, Effurun (FUPRE,) as it continues to operate in the state and contribute to its development.

Weli explained that the Professorial Chair in Light Weight Automobile Engine Development was activated at FUPRE in December last year and is the latest of six established by SPDC JV, noting that the Chair at Effurun is expected to contribute to the growth of local content in Nigeria’s automobile industry.

He added that in a bid to boost employment especially among youths, more than 700 young men and women have benefited from Shell’s LiveWIRE initiative between 2003 and 2017.

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