Moody’s rates Nigeria peaceful election credit positive

International Credit Rating Agency, Moody’s, says Nigeria’s peaceful transition of power is credit positive, despite persisting economic challenges.

“Nigeria just concluded its most contested elections since the country first organised democratic elections in 1999.

“This relatively peaceful transition is credit positive — it will likely put Nigeria on a more politically stable trajectory.” Moody’s stated in a recent research note received by BusinessDay.

According to Moody’s, the peaceful rise to power of the president-elect Muhammadu Buhari, underscored the “strengthening of Nigeria’s democratic foundation.”

The ratings agency expects Buhari’s much campaigned anti-corruption drive to yield economic dividends for Africa’s largest oil producer, badly hit by falling oil prices since June last year.

However, there may be no major difference between the policy actions taken by the current administration to tackle the impact of falling oil prices and those available to the incoming government come May 29.

“We do not expect a large difference … as there was no great divide during the campaign on this topic,” says Matt Robinson Vice President at Moody’s.

The Economist Intelligence Unit (EIU) also shares this viewpoint, stating that “the economic ideologies of the APC and the PDP are not radically different and so no steep changes in policy are expected.”

The current Jonathan administration, in a bid to sustain the economy, has revised the 2015 oil price benchmark to $53 per barrel, devalued the naira to about $1/N197 and looks to raise over $1 billion in non-oil revenues through tax reforms and streamlined spending.

Notwithstanding the external and fiscal headwinds, Moody’s sees economic respite in Nigeria’s “very strong” balance sheet and “very low” level of overall debt, estimated at 14% of GDP at end-2014.

“This offers substantial headroom for further financing, as the new administration assesses its policy options.”

The agency draws on Buhari’s credentials as one-time military ruler, expecting domestic security to “likely improve” under his administration.

“An improved security environment would support economic growth and development.”

According to Moody’s, the fact that Buhari was elected by a margin of 2.57 million votes, corresponding to 53 per cent of the popular vote, underscores the popular mandate for his campaign promises.

However, the EIU warns of the daunting prospect of dismantling a “patronage network” established over the 16-year continuous rule of the People’s Democratic Party (PDP).

According to a recent poll conducted by BusinessDay, 79 percent of respondents chose “Fight Corruption”; “Fix Power”; and “Solve Insecurity” as the top three tasks for the president-elect.

Moody’s remains the only of three rating agencies to maintain a positive outlook on the Nigerian economy at “Ba3” stable rating.

A few days before the March 28 elections, Standard and Poor’s (S&P) downgraded Nigeria to ‘B+’ from ‘BB-‘, citing the impact of political tensions and oil price declines on the economy. Fitch Ratings also revised Nigeria’s long-term outlook to ‘negative’ from ‘stable’ but affirmed the country’s ‘BB-’ rating.

The elections ended peacefully with the incumbent President Goodluck Jonathan conceding defeat, to the admiration of Nigerians and the global community.

Akin-Olusoji Akinyele