Moody's upgrades Nigeria's outlook to positive

Moody's Investors Service has upgraded Nigeria's outlook to positive from stable, indicating a potential reversal of the decline in the country's fiscal and external position due to ongoing reform efforts. Tilewa Adebajo, CEO of CFG Advisory, discussed the implications of this upgrade in an exclusive interview on CNBC Africa. Adebajo highlighted the significance of the international community's recognition of Nigeria's reform initiatives, emphasizing the need for these reforms to address social issues such as poverty alleviation. With 130 million Nigerians living in multidimensional poverty, Adebajo stressed the importance of aligning poverty alleviation programs with the ongoing economic reforms. The upcoming budget and the positive outlook from Moody's serve as a validation of the Minister of Finance's reform agenda, according to Adebajo. The shift to a market-driven exchange rate mechanism has led to fluctuations in the value of the Naira, reaching a low of 1,099 against the US dollar recently. Adebajo noted that while challenges remain, the flexibility of the new exchange rate system will allow for adjustments as conditions evolve, ultimately leading to a more stable currency. Looking ahead to the coming year, Adebajo shared insights from a recent meeting with Nigeria's finance minister, highlighting the focus on digital transformation for revenue generation and efforts to increase oil production to boost government revenues. The government's commitment to reform with a human-centered approach was underscored, recognizing the importance of sustainable economic growth for poverty reduction. Adebajo emphasized the need for consistent implementation of reform policies to build investor confidence and sustain positive momentum. The success of Nigeria's reform agenda hinges on effective budget execution in the upcoming year. Adebajo raised concerns about rising debt service costs outpacing capital expenditure, underscoring the importance of meeting revenue targets through increased oil production and subsidy removal. Achieving these goals will be critical to addressing the country's fiscal challenges and supporting economic recovery. As Nigeria navigates the complexities of budget planning and fiscal management, the government's commitment to reform and sustainable growth will be closely watched by investors and international agencies alike. The positive outlook from Moody's serves as a vote of confidence in Nigeria's reform trajectory, but the real test lies in the successful implementation of policy measures and revenue generation initiatives in the year ahead.