Nigeria Remains Very Attractive For Investments - Analyst, Nabila Mohammedl

Added: 2026-05-19

[00:00:00]All right then. Thank you so much. S&P Global Ratings has upgraded Niger's credit ratings from B negative to B uh that um with a stable outlook and indication that the US-based agency believes Nigeria's economy is getting better. The improved ratings was disclosed by finance minister Taw delay in an expost over the weekend and this latest upgrade by him. He says by S&P follows similar positive ratings actions in 2025 by feature ratings and Moody's ratings. Now TV news reports that feature and Moody's had upgraded Nigeria's sovereign ratings with feature also raising the ratings from B to B uh be negative to B and has to get a stable outlook. Mr. Yel said the improved ratings by the three global rating firms indicates their belief in President Bolatinumbu's economic policies. The federal government welcomes the decision by S&P global ratings to upgrade Nigeria's sovereign credit. Uh that's from B negative to B with a stable outlook. This latest upgrade by S&P follows similar positive rating like I said earlier by FE Moody's ratings. It further reinforces growing international confidence in Nigeria's economic reform trajectory, policy consistency and medium-term growth prospect. Well, my guest today is an investment analyst with Chapel Hill Denham, Nabila Muhammad. She's live in the studio. Uh thank you so much. It's good to have you live here. Good afternoon. Thank you so much. I'm sure you got this news and maybe it excited you too, but tell me how does it really come to you and what does it make looking at Nigeria now being upgraded by the likes of SMB? So this is like a welcome development and it's a recognition of the three years of structural reforms that have taken over the years and it's just like what we saw with regards to pitch and Moody's upgrading that particular our rating outlook and it's positive for us positive in the sense that it's another additional pull to foreign capital inflows into the country. So if we start to see more of them because they are confident that across borders across the three names that are you know recognized in terms of ratings that's f Moody's and S&P all three have reviewed and revised our ratings upward then it is indeed positive especially when we look at how we pan out in terms of our you know our view in from a foreign capital perspective. M >> foreign capital perspective it sounds really good and according to the minister he says fallout of the reforms they're commending presidentubu regards to the reforms do you also agree with that what about the fallout of these reforms that we keep talking about >> so the reforms if we're looking at what S&P specifically highlighted they mentioned the impact of the positive impact of the dangote refinery it mentioned the fact that FX um the exchange rate market has also been you know liberalized in such a way that it is now transparent and there are also supporting policies that are enabling that transparency to thrive. So all these are some of the positive impacts that they did mention and they even went ahead further to say that they would likely review it upwards over the next 12 months if we see some level of sustainability on these reforms. And they've also mentioned the downside that because of the whole impact of the Middle East crisis. If that should continue to you know foil inflation further that would also mean that they may revisit that revision and you know bring it down. But again they are calling on the you know the government to also make sure that we do not have or feel the impact of the increase in crude oil prices by doing some structural reforms in that space that would support you know the the or ease the pressure in terms of increase in oil fuel prices locally. So that's also an area of concern that they did mention but generally they are positive with regards to the structural reforms and you know what we are seeing in terms of impact.

[00:03:51]we've seen an improvement in current account balance and they are also projecting that that would also improve further and even with um the current level of debt to GDP ratio that we have which is around 36% they mentioned that as a positive they also did mention that if we're able to you know um enjoy or utilize or sort of you know enjoy the impact of the high crude oil prices by upping our production levels which they expect to average around 1.66 66 million barrels per day if I'm not mistaken that would you know support the overall revenue of the government as in going forward. So these are some of the areas that they mentioned as well as the downsides that they are looking at over our revision in the next 12 to 24 months. I I'm looking at um the impact of this Middle Eastern crisis now and what is doing to price of crude oil and of course coming down to what we are paying at the pumps. That to me is one um one issue that I've been talking about for some time and everyone is saying uh this might affect some of the positives of this um government. We see inflation already ticking up. We saw inflation come out on Friday at about um 15.69% six 9% and I get now now are you are you worried about the the the impact of this on the positives of this reforms >> so a couple of things played out when we saw the inflation print for April 2026 number one is that we looked at specifically the energy sub index and that index amongst all the other sub indices rose the fastest on a month-to-month basis 8% was what we saw recorded in the energy sub index and one key thing that we always fail to move up.

[00:05:32]>> We always fail to, you know, recognize the fact that energy inflation is actually very contagious because it spreads and spills over to other sectors of the economy. I'm talking in terms of manufacturing, distribution, even just, you know, um moving from your produce from the farm to where they are needed is also something that would be impacted by a a significant rise in energy cost.

[00:05:56]And that was what played out in the overall inflation. and we saw it print at 15.69%.

[00:06:02]So yes, it is something that is a bit of concern because at the start of this year, everyone was, you know, expecting that would likely start to see aggressive rate cuts. The MPC, you know, decide to, you know, become more dovish in terms of their approach and we've already even see seen that materialize with the first race card this year of 50 basis points. But then with everything that has happened between February till date, it's something that you know we need to really focus on in terms of inflation and in house we even expecting that the impact is not entirely over because we have seen that energy prices especially you know the local fuel price that you mentioned have been up on average from 1,200 to around 1,300 levels per liter. So that is something that is of concern and how it spills over to other businesses because we may not see the impact on goods and services immediately. It is something that would lag over the coming months and that is something to indeed watch out for. So yes it is a bit of worry um you know with regards to all everything that we have enjoyed over the past I mean we experienced 11 months of this inflation before last month that's March and April inflation print came out and we saw a resurgence because of the impact of the war so that is an area of concern indeed >> so are they quick wins are there no now interventions what sort of interventions do you think government should think of think of at this time yes I know everyone is running away from the word subsidy And I'm I'm not too interested in that too because we know what played out. But what do you think? Because the minimum wage remains 70,000. Maybe some states are paying more and of course even many workers have not gotten increases across the board. So what do you think? I'm thinking of something that would really impact and touch the vulnerable ones. So you know at some point when the whole um you know crude oil prices started to rise and we saw it peak at levels of 120 some dollars per barrel in the course of from February to April. What we noticed some countries did was to you know try and temporarily suspend some of the excise duties that these importers of refined petroleum product you know um had to pay. So and as much as the crude oil prices have increased and they also have to increase their own domestic prices, if they are able to you know cut down on some of the other expenses that are tied to it specifically speaking the excise duties just temporarily not something permanent of course that should bring some level of respect in terms of the pricing locally and that you know translates and trickle down to the other sectors that are directly affected by this surge in energy cost. So that is one area I feel like is a quick win and it's not because we expecting we're not expecting the war to you know continue to linger. We're not praying for it to linger but then we are looking for areas that can bring some level of ease to the other businesses and that's one area I think is a quick win for the government.

[00:09:02]>> Interesting stuff. Again, we saw the president last week from Nairobi to Rwanda and all of that and you know as you uh chief marketer of of the country. Yeah.

[00:09:15]You know I think I think we've had that conversation one time and I hear many analysts keep saying that too. What do you make of this meetings Africa CEOs meetings and of course the Africa France meeting. They look strategic to me. Yes, I would say so because it's more or less like the president trying to you know promote the Africa first agenda and there they mentioned a lot of things around encouraging trade relationship between the African countries looking at areas that they can collaborate in terms of ensuring that he even mentioned something around establishing a commodity exchange looking at the powerhouses in the you know African region and how they can come together to establish a commodity exchange that would enhance that flow of trade between these nations. So I think it is more or less like the talks that are you know going in this right direction but then again we have to see the actions actually being put in place. So it's one thing to mention that these are the policies or these are the things that need to be done and it's another thing to get them done. So if they have identified that these are areas that they can do and make things better even in terms of aggregation and encouraging you know exports for businesses and cargo and all of that then they can also start to implement it and that is what will really make the difference eventually.

[00:10:34]walking the talk. the talk I'm walking the talk truly to me we've seen what's been happening in the oil and gas space to talking about investment now are you still would you say uh that despite all of these issues and even the Middle Eastern crisis which is threatening uh almost the entire world one way or the other yes it is uh would you still say Nigeria remains that attractive for investment >> of course Nigeria remains very attractive for investment because I mean we're not there yet if we're even looking at it from in terms of um you know just equities the equities market and transformations that have gone in there over the past two to three years you'd agree with me that we are making the right strides to get the right capital to come into the country what do I mean by that if we're just talking foreign portfolio investment we have extended trading hours for the equities market we have you started to do the T+2 settlement and the T+1 is coming next month as well so these are positive structural reforms that have already gone on in that space if we're Talking specific sectors, we have seen how they have encouraged a level of investment in the oil and gas space. We've seen how they have, you know, um, allowed for more investors, private investors play in that space and acquire some of the assets that, you know, were not necessarily functional. We've seen the transformation that has happened in terms of the gas and how, you know, some of the players in there have started to turn out gas revenues because of their performance. Spec speaking specifically to Sephlat. So these are positive things that you know are ongoing that I believe you know will support the overall attraction as far as Nigeria is concerned. Yes, there are still structural challenges but I mean it just means that whatever has been done so far we've been able to attain some level of you know um recognition globally that has supported the capital flows into the country and we still have direct investors that's foreign direct investments that still believe in the country. Remember we had PZ also mentioned that they are very confident about the Nigerian markets. This is just one out of all numerous manufacturing companies that have said that they are positive about the you know the reforms and the structural things that we have seen transform the Nigerian market. So it is still an attractive destination you know just from those standpoints alone. again again still staying uh with the Middle East crisis and um what is going on. We saw uh looking at the OPEC stuff, you know, UAE also stepped out of OPEC and all. But my my question really would be um some have talked about government maybe coming up with um uh maybe crude deals and all of that. But my my my argument is do we have enough for us to even be able to maybe have strike a deal with Dangote? Some some people said that but I also think that Dangote is a businessman. He's also here to make money. So how do we balance all of this? I'm talking about the price of oil again.

[00:13:29]>> So to be honest, I would say that one thing we should expect is um in fact in terms of you know ramping up production.

[00:13:38]>> Yes, >> we have done 2 million barrels per day.

[00:13:41]It's not something that is impossible.

[00:13:43]It's something that has been done. In fact, it was even done in a period when we were experiencing all those COVID 19 attacks. We went as high as 2 million bars per day. It means that we can get there again. And that is something that I believe that the government should really focus on just looking at how they can ramp up production. We've done so well in terms of getting to the level that we are around 1.6 million barrels per day. But can we do more? The answer is yes. And it is only when we can do more that we can now say we want to strike whatever deals that is necessary because right now even with what we have we have to give some of it to the Dangote refinery. We have to also sell some of it because it's some level of um some form of inflows into the country and that alone cannot be sufficient if we do not have much more in terms of production. You know there's something that we always argue in my at the office. We always say that when prices are elevated that is when Nigeria should be taking advantage of you know uh by ramping up production to match you know the the the increase in prices with an increase a corresponding increase in the level of production but we don't really always see that pan out. So now that prices are elevated why not ramp up production to get to that level. Fine.

[00:14:51]You acknowledge the strides that they have made in terms of you know cutting um or addressing theft and you know the structural reforms that they have done particularly with the petroleum industry act that has come to you know do a lot of transformation in that space we like all of that can they do more the answer is yes because I mean we have seen 2 million bars per day why not >> can't we even do more than that you touch on the stock market let's wrap up with that I've seen some brilliant performance in that space though we saw the banking stocks there's been back and forth with regards to to that. So how would we wrap let's wrap this up now.

[00:15:24]What do you make of the performance of the market? Um um what's your outlook generally for it?

[00:15:31]>> I think we're just getting started with equities market. Yes, we have rallied up to yesterday I think we're around 60% year to date equities market up and there's one thing there are some factors that I would say would support that.

[00:15:42]Number one is that the structural reforms that I mentioned that have changed so far this year in terms of allowing longer trading hours. It mean participation in the market alongside other markets globally. I'm talking the New York Stock Exchange and that concurrence meaning that we are open the same period that those other markets are open. It means that there is a avenue for capital to flow across the country or into the country because of that overlap. Another factor is that we have seen over the past two three years but three to five years equities market has outperformed other asset classes in the market. I'm talking fixed income related instruments or even the it has really just you know given investors that stronger returns compared to others and that is what we expecting this year. New listings is another thing we're expecting the game changer listing to happen this year as well. I would not be surprised if the equities market will return you know a much stronger level than what it currently is because that is one key you know listing that is going to transform the entire equities market. So all of these are some of the things that we have seen recorded in the equities market. Not to even talk of the sector specific transformations that have happened. The banks have claimed their books. They are very liquid. They pay dividends.

[00:16:58]>> Attractive stocks. We have seen what the oil and gas have been able to benefit from in terms of the high crude oil prices and the oil and gas index is over 100% up yet to date. We've seen that as well. We've seen consumers return to dividend paying. Guinness paid dividend earlier this year. So this is a positive for sector specific you know performances and what we expect will drive the rest of the year. Yes we always have to throw caution to the wind. I mean it's not all you know glory glory and you know rosy rosy but then again those caution the cautions that we need to look at are related to um election activities that would you know start to really be active in the second half of the year and how that would you know shape investor sentiment around you know how it will affect different sectors so that's one thing to watch out for but from where we stand right now we believe that the equities market is still set to outperform >> investment analyst uh there Abila Muhammad Chapel Hill and Ham, thank you so much for starting the week with us on Business Nigeria. We appreciate this.

[00:17:56]>> Thank you for having me.

[00:17:57]>> All right. Enjoy the rest of your day.

[00:17:59]>> You too.

[00:17:59]>> All right then. Well, we'll take a break and when we come back, the conversation continues. Stone.