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Economy & Politics

Nigeria’s ratings risk downgrade over rising debt and lower revenue

The Federal Government has been under increasing pressure to reduce its debt and stimulate growth.

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Nigeria’s ratings risk downgrade over rising debt and lower revenue, Godwin Emefiele, CBN, Textile, CBN
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One of the biggest credit rating agencies, Fitch Ratings, in its latest report, said that Nigeria’s global rating is at risk, following a sharp rise in its sovereign debt and a growing finance gap.

The rating agency has disclosed that these could trigger a rating downgrade, as policymakers in Nigeria struggle to deal with the impact of the low oil prices and sharp drop in revenue, caused by the coronavirus pandemic.

Fitch, had in April downgraded Nigeria’s Long Term Foreign Currency Issuer Default Rating (IDR) to ‘B’ from ‘B+’ with a negative outlook. The downgrade and negative outlook in April, reflects the aggravation of ongoing pressures on Nigeria’s external finances following the recent crash of oil prices and the shock due to the coronavirus pandemic.

READ MORE: S&P Global affirms AfDB’s AAA rating, projects stable outlook

According to Director at Fitch, Mahmoud Harb, “We have two elements that could lead us to take a negative rating action/downgrade on Nigeria. Aggravation of external liquidity pressures and a sharp rise in government debt to revenue ratio.”

The Federal Government has been under increasing pressure to reduce its debt and stimulate growth after its first quarter current account turned negative, with an overvalued local currency.

The report notes that Nigeria’s external reserve is larger than the funding needs, however, external liquidity strains could increase if foreign investors sell down their portfolio investments in the country, putting pressure on ratings.

Harb said that the debt to revenue ratio for Nigeria is set to deteriorate further to 538% by the end of 2020, from 348% that it was a year earlier before improving slightly next year. The medium debt ratio of ‘B’ rated countries is 350%. He also pointed out that the country’s external reserve could drop to $23.3 billion from $36 billion this year if access to foreign exchange is normalized.

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READ MORE: CBN extends timeframe for submission of banks’ audited financial statements

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The CBN had restricted access to the foreign exchange since the crash of oil prices and the outbreak of coronavirus pandemic, in order to protect and strengthen the naira.

Fitch, had estimated that Nigeria would need $23 billion to meet its external financing needs this year. This might take the country’s external reserve lower, especially following the stopping of the plans for the country to issue Eurobonds.

Harb said that Nigeria could avoid a ratings downgrade if it improves its finances, reforms its foreign exchange policy and reduce its deficit by boosting non-oil revenues.

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However, the borrowing trend by the country seems to continue, with plans by the Federal Government to borrow another $3 billion from the World Bank.

The Federal Government had announced its plan to unify the exchange rate in order to generate more revenue and manage the rate in a sustainable manner. The IMF had always stated that unifying the exchange rate would impact the economy more positively than the multiple exchange rates, which give rise to arbitrage.

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Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Business News

Isa Pantami: Terrorist sympathizer or victim of his NIN policy

Despite renouncing his past radical views, more people on social media and even public figures, have joined the agitation for his resignation.

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NIMC. Ali Isa Ibrahim Pantami, 5G network, NIPOST defiant to FG’s instruction on cash payments  , How the NCC’s Strategic Management Plan Will Drive The Digital Economy, FG set to commission National Centre for Artificial Intelligence and Robotics in Abuja
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The calls for resignation and pressure on the Minister of Communications and Digital Economy, Dr Isa Pantami, over his alleged links to extremist groups like Al-Qaeda and Boko Haram in addition to his pro-Taliban views has continued unabated.

The campaign which started with unconfirmed media reports that the United States Government had allegedly placed him on a security watchlist over alleged links with the late founder and leader of the dreaded Boko Haram group, Mohammed Yusuf, later snowballed into a series of other allegations which border on his extreme Islamic views and activities in the past.

Pantami, an Islamic cleric, in his initial reaction to the allegation of being on US security watchlist due to his extremist views, denied the allegations, saying that he had always preached against the Boko Haram sect for over 15 years over its condemnable doctrines and practices at the expense of his life.

He alleged that those behind these allegations are those who are not happy with his implementation of the good policies of President Muhammadu Buhari on security especially the government policy on National Identification Number (NIN) and threatened legal action against the publishers.

The Minister in his statement said, ‘’News Wire Nigeria your retraction through your independent investigation has been noted. However, investigative journalism requires the investigation before publishing, not after. Further, major publishers will meet my lawyers in court on this defamation of character.

My lectures against the doctrines and all other evil people have been available for over 15 years, including debates that endangered my life against many criminals in Nigeria. If you can’t understand Hausa, get an objective Hausa speaker to translate for you objectively.

For your information, by the Almighty, no amount of intimation will stop Isa Pantami from implementing the good policies of President Muhammadu Buhari, GCFR on security.”

As the calls from Nigerians for the resignation of the 48-year-old Minister continued, over his religious views, Patanmi, for the first time on Saturday, April 17, 2021, according to some media reports, acknowledged his past religious views but said that he has since renounced those radical comments.

He blamed his past radical leanings on age, immaturity and limited knowledge as well as based on his understanding of religious issues at the time, adding that he has changed several positions taken in the past based on new evidence and maturity,

SSKOHN

However, despite renouncing his past radical views, more people on social media and even public figures, have joined the agitation for his resignation, saying that his views as a student cannot be blamed on age.

Some Nigerians have expressed their views on the matter with a good number of them insisting that the Minister has to resign.

A Twitter user, Chris Chukwu, said Nigerians are not going to sleep on this issue because he is a threat to National security.

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Festus Ogun said that if the President refuses to sack Pantami, he should be prepared for #EndSARS part 2.

Effiong John, while stating why President Buhari would not sack the Communications Minister said that a terrorist apologist will not sack another terrorist apologist.

A human rights activist Comrade Deji Adeyanju said that a terrorist sympathizer is a terrorist.

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Ayemojubar lamented that Nigeria has been taken over by terrorists.

Another Twitter user, Abiodun Sanusi said that sympathizing with Isa Pantami is the same as showing sympathy for Osama Bin Laden.

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However, while responding to Governor Wike’s reaction to the issue, a former presidential aspirant, Omoyele Sowore said that the Rivers State Governor was only grandstanding as he was some time ago, caught on tape threatening to kill an INEC official.

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Some Nigerians have, however, expressed their support and sympathy for the Minister as they believed that he is being victimized for some of the government’s policies that he is driving.

A Twitter user Khaleel Kumo said that #Pantami must go is purely hypocritical and directed at anything good that comes out from Islam.

A Twitter user Faarees asked that the #PantamiMustGo must stop trending and Nigerians should go and link their SIM with their NIN.

Musbey in his defence for Pantami said that as long as you are a practising Muslim and successful, they will hate you.

 

Also, in defence of the Communications Minister, the Presidency through the Senior Special Assistant to the President on Media and Publicity said that Pantami, made those extremist remarks when he was in his 20s and has since then retracted them and changed his views.

The Presidency pointed out that this currently manufactured dispute has nothing to do with the Minister’s prior words but rather concerns over his actions in the present which include leading the charge against illegal data deductions and pricing, deregistering 9.2 million SIMs thereby ending the ability for criminals and terrorists to use mobile networks undetected.

Also reacting to alleged links of Pantami to the death of the late former Governor of Kaduna State, Patrick Yakowa, the Chairman of Christian Association of Nigeria (CAN), Kaduna State chapter, Rev. John Hayab, warned against linking the death of Yakowa to Dr Isa Pantami.

He called on Nigerians to ignore such insinuations and release of some documents with doubtful authenticity, which endangers national peace.

The very critical question is why these allegations are coming up now after almost 2 years in office as a Minister. Is he a terrorist sympathizer, an allegation he has denied or is he a victim of some of the government policies whose execution he is spearheading?

These are questions that are still begging for answers.

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Presidency condemns smear campaign against Communications Minister

According to Garba Shehu, the FG stands behind Minister Pantami and all Nigerian citizens to ensure they receive fair treatment, fair prices, and fair protection in ICT services.

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The Presidency has dismissed the ongoing smear campaign against the Minister of Communication and Digital Economy, Dr Isa Pantami, instigated by those who want him to be removed from office.

This follows the calls for his resignation by Nigerians over his alleged links to some terrorist organizations and some extremist statements he made over 20 years ago.

This reaction is contained in a statement issued by the Senior Special Assistant to the President on Media and Publicity, Garba Shehu, on Thursday in Abuja, describing such calls as unfortunate.

He said that it is unfair and unfortunate for anyone to seek for the downfall of a hard-working public servant due to a statement he/she made in the past even after such a statement had been rejected by the affected person.

What the Presidential Media Aide is saying

Shehu in his statement, said, ”Today, there is an unfortunate fashion in public discourse that makes leaders in politics, religion, and civil society liable in the present for every statement they have ever made in the past – no matter how long ago, and even after they have later rejected them.

This insidious phenomenon seeks to cancel the careers of others on the basis of a thing they have said, regardless of when they said it. The Minister of Communications and Digital Economy, Dr Isa Ali Pantami is, currently, subject to a “cancel campaign” instigated by those who seek his removal.

They do not really care what he may or may not have said some 20 years ago: that is merely the instrument they are using to attempt to cancel him. But they will profit should he be stopped from making decisions that improve the lives of everyday Nigerians.

The Minister has, rightly, apologized for what he said in the early 2000s. The views were absolutely unacceptable then and would be equally unacceptable today, were he to repeat them. But he will not repeat them – for he has publicly and permanently condemned his earlier utterances as wrong.

In the 2000s, the minister was a man in his twenties; next year he will be 50, time has passed, and people and their opinions – often rightly – change.”

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Shehu pointed out that Pantami was deliberately being attacked to rubbish the achievements of the Buhari administration in the ICT sector.

He also listed the achievements of Pantami in the Ministry of Communication and Digital Economy in the past two and a half years.

This Administration is committed to improving the lives of all Nigerians – and that includes ensuring they are not over-charged or under-protected for those services on which modern life depends.

The Minister has been leading the charge against illegal data deductions and pricing. He has revolutionized the government’s virtual public engagement to respond to COVID-19 and save taxpayers’ money. He has established ICT start-up centres to boost youth entrepreneurship and create jobs.

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He has changed policy to ensure locally produced ICT content is used by ministries, starting with his own; and he has deregistered some 9.2 million SIMs – ending the ability for criminals and terrorists to flagrantly use mobile networks undetected.

In two short years, Minister Pantami has driven the contribution of the ICT sector to the GDP to more than 18 percent, making it one of the top two playing a critical role in the emergence of the economy from the COVID 19-induced recession.’’

Shehu said, “The minister and this administration have made enemies. There are those in the opposition who see success and want it halted by any means.

And there is now well-reported information that alleges newspaper editors rebuffed an attempt to financially induce them to run a smear campaign against the minister by some ICT companies, many of which do indeed stand to lose financially through lower prices and greater consumer protections.

The government is now investigating the veracity behind these claims of attempted inducement, and – should they be found to hold credence – police and judicial action must be expected.

The Administration stands behind Minister Pantami and all Nigerian citizens to ensure they receive fair treatment, fair prices, and fair protection in ICT services,” he added.

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In case you missed it

It can be recalled that Some Nigerians had asked Pantami to resign over his alleged links to some terrorist groups including Boko Haram, an allegation that the Minister had denied.

 

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