Moody’s downgrades Nigeria’s currency & debts ratings

Nigeria faces a challenging economic landscape as Moody's recent downgrade to CAA1 from B3 signals growing concerns about the fiscal position of the country. The downgrade comes amidst the announcement of an extension of the deadline for the phase-out of old Naira notes, highlighting the difficulties faced by the Central Bank of Nigeria (CBN) in managing the currency transition. The move to extend the deadline from January 31st to February 10th has sparked criticism and raised questions about the effectiveness of the implementation process. Femi Oladehin, a Partner at Argentil Capital Partners, expressed skepticism about the central bank's ability to handle the situation effectively, pointing to logistical challenges and credibility issues. Oladehin highlighted the impact of the currency swap on liquidity in the banking sector and the need for sustainable solutions to address the cash shortage. While the CBN claims a 75% success rate in the currency swap, reports of empty ATMs and difficulties accessing new Naira notes suggest ongoing challenges. The article addresses the implications of Moody's downgrade on Nigeria's borrowing ability and the urgency of addressing fiscal challenges through prudent economic decisions. The analysis emphasizes the need for tough policy choices, including subsidy removal and productivity enhancement, to put the country on a path to sustainable growth. With looming uncertainties in bond values and revenue sources, Nigeria faces a critical juncture requiring proactive measures to navigate the economic turbulence. The upcoming general elections in February also present a potential pivot point for stability and investor confidence, adding another layer of complexity to the economic outlook for Nigeria.