Nigeria is being rated by three major rating agencies, Standard & Poor, Fitch and Moody. But out of these three, Standard & Poor has released its result showing that the nation’s economy is BB minus, with stable outlook.

Although, Moody was not invited, it deemed it fit to start rating Nigeria because of its very important position in the global economy.

The BB minus, was the same rating given to the country last year, so it shows that very positive things are going on in the nation’s economy.

They have also acknowledged the challenges that we have. However, they said that in spite of those challenges, Nigeria’s economy is robust, macro-economic indicators are strong, the ongoing monetary policy is constant and fiscal standing is strong enough for us to maintain very good rating that we had before.

It is now once more confirmed externally that Nigeria’s economy, in spite of various ongoing challenges, is in the right direction, courtesy of government’s fiscal policies and CBN’s stable monetary policies.

While we are not shying away from the fact that there are challenges in the economy, we are addressing that problems and the rating agency did affirm this in its report.

On The Fiscal Side
Tthe rating agency looked at the potential strong Gross Domestic Product (GDP) of the nation between 2013 and 2016, primarily due to non-oil growth, which to them was very encouraging. They are looking at some of developments in the non-oil sector that are already showing some positive signs, such as the ongoing power sector reform, the fact that our growth is not really coming from the oil sector but from non-oil, agriculture development, retails and telecommunications.

They are assessing our external debt stock burden, which in their opinion is relatively low. They also noted the fact that the nation’s foreign exchange reserves remains strong, courtesy of its effective management by the CBN. They are also viewing positively the fact that Asset Management Corporation of Nigeria (AMCON) would be redeeming some of its debt, about N1.7 trillion in cash, and taking that off its books.

Challenges Identified
On the challenges which must be addressed by the Federal Government to sustain and improve the macro economic indices, the rating agency commented on the need for us to maintain strong fiscal side by not running down our excess crude account too rapidly and the fact that we must provide employment to reduce unemployment among youths, invest more in infrastructure and make sure that the benefits of growth go down to the bottom to reach the masses, as well as fighting the crude oil theft.

We are living in a difficult global economic environment and whenever we are assessing ourselves economically, we should place everything in context and look at things in relative terms. We should look at the number of countries such as the United State of America, whose rating has been downgraded as a result of global economic challenges, meaning that, even if we have a downgraded rating, we should know that some of these things are due to external factors that are beyond the control of monetary policy makers.

Therefore, for us to have been able to maintain a good rating at this point in time, it is not a small job. And if you look at the concluding remarks of the rating agency, they did indicate that we actually raised the rating if the present policies are maintained and institutions strengthened. So it is a positive outlook for the future of the country rather than a negative one.

Implications of the Rating to Nigerians
What the positive means is that more money will come into the country for investment and employment generation.

In every country, both ordinary people and investors need to have a way of knowing whether the economy is being managed in the right way or whether it will provide a kind of environment that private investors can invest in. You know, it is the private investors that will create jobs. We have said that in every country, it is not really the government that will create jobs, it is the private sector. If the private sector has no objective means of knowing whether the economy is going in the right direction or not, they will not know whether to invest in a country or not.

So for the ordinary Nigerian, this means that we are sending strong signal to both domestic private investors as well as the foreign ones that this economy is being run in the right direction. Also because they rate virtually the countries of the world, just as the IMF looks at the economy of countries across the world, this is a formal signal that the economy is good.

The ordinary Nigerian needs to know that the private sector investors will come in to create jobs when they see that we have better rating, after all, what they are looking for are job opportunities. So you will see that many companies will say ok, Nigeria is a reasonable place which I can go and invest and create jobs.

Importance of Rating
The rating is important to investors all over the world, because we are living in a world where capital is very scarce. We have people living in Washington who don’t have all the information on other countries. Not everybody has information on Nigeria, Ghana or Vietnam, the way they have on United States and United Kingdom.

These rating agencies get to these countries; they look at their policies and analysis data. Even if you stay in London, they give idea of where it is safe to put your money. That is why credit rating is extremely good. So, having this rating in Africa is a blessing and it is right time to move on with this BB minus rating.

Nigeria is very conservative about borrowing. The focus of the government is to create enabling environment for the private sector to thrive and to ensure poverty reduction. That is why our emphasis is on trying to use the limited resources in borrowing for productive purpose. Our emphasis is to provide a platform for the private sector to do the borrowing and employment generation. That is what we have laid emphasis on in recent time.

We have gone ahead to use the debt management platform to encourage the private sector to start issuing debt instruments for borrowing domestically and externally, much of what we are doing, particularly on external debt, is to open the window of opportunity for the private sector to borrow, in addition to foreign direct investment. So they must take advantage of the current debt benchmark to raise more money both locally and at the international market.

Savings from SURE-P
The Federal Government had been publishing savings from SURE-P on the pages of newspapers. About N18 billion per year was being saved and the same thing goes for the state governments. The exact figure being saved would be revealed soon at the appropriate time when the figures are summed up from the beginning of the year.

Last year, we did not use all the savings and it accumulated. We have certain amount left. But the programme is being managed in a totally different way. The CBN has nothing to do with SURE-P except that they are banker to the account. The committee chaired by Dr Christopher Kolade is the one saddled with the responsibility of managing that account. The director general of the budget is the secretariat for the account. When expenditures are made by the contractors and they are validated by the Planning committee, they will present the certificate and the CBN disburses the money. That is the way it works and all the money we have saved is there and is being accounted for, but money has to be appropriated by the National Assembly before they can be spent.

On a Final Note
The rating agency is not saying that the Nigerian economy is perfect. they are saying that there are many challenges but they are being fixed and the economy is being run by the right people in the right direction. So if we strengthen institutions and improve our policies we could even do better.