Tinubunomics: S&P revised Nigeria’s economic outlook from negative to stable

S&P Global Ratings has revised its outlook on Nigeria, changing it from negative to stable, applauding the government’s recent reforms that could potentially spur the country’s growth and fiscal outcomes if successfully implemented.

The credit ratings agency has reaffirmed Africa’s largest economy at ‘B-/B’. 

President Tinubu’s reforms 

Nigeria’s new president, Bola Tinubu, has embarked on a bold reform agenda, aiming to ignite growth and attract foreign investors to a nation plagued by chronic dollar shortages that hindered business development. 

“Nigeria’s newly elected government has moved quickly to implement a series of fiscal and monetary reforms, which we believe will gradually benefit public finances and the balance of payments,” S&P said in a statement on Friday. 

During his inauguration speech, the President ended the decades-long fuel subsidy regime and in June, the Central Bank of Nigeria (CBN) unified the multiple currency exchange window. 

In a remarkable move, Tinubu announced on Monday that Nigeria has already saved over 1 trillion naira ($1.32 billion) in just over two months by eliminating a costly subsidy on petrol and unifying the country’s multiple exchange rates. 

Opposition Tinubu’s reforms 

Although investors have warmly welcomed Tinubu’s reforms, some unions have raised concerns about soaring costs, given that inflation has remained in double-digits since 2016, eroding savings and incomes. 

On Wednesday, Labour unions across the country engaged in massive protests even after President Tinubu’s promised a slew of interventions such as a review of the national minimum wage, provision of single-digit interest loans for manufacturers to the tune of N75 billion, purchase of CNG buses, and cash transfer to MSMEs etc.  

However, the federal government is still in talks with the Labour and trade unions on how the post-subsidy interventions will be administered. 

The World Bank predicts substantial savings of up to 3.9 trillion naira this year alone from the reforms but also warns about potential short-term inflationary pressures. 

In anticipation of the Aug. 4 review, S&P’s sovereign analyst, Frank Gill, closely monitored Nigeria’s progress, commending the positive signs demonstrated by the recent reforms. 

Back in February, S&P maintained Nigeria’s credit rating at “B-/B” but had altered the outlook to “negative.”

Meanwhile, Fitch, a rival credit rating agency, affirmed the West-African country at ‘B-‘ in May.