E-Financial
FXTM Analysis: IMF’s Warning Weighs Heavily on Sentiment in Nigeria
The improving sentiment towards the Nigerian economy was dealt a heavy blow in March following reports of the International Monetary Fund’s (IMF) warning of a potential economic collapse if the nation failed to move ahead with reforms.
Although at the start of the year the economic outlook was elevated on repeated occasion with even the World Bank predicting an encouraging growth for 2017, the pending report from the IMF which may be seen as a warning could create some headwinds as the nation attempt to secure international loans worth $1.4 billion. While global markets have acknowledged that the largest economy in Africa is in the process of a key fundamental transformation that may exceed all expectations, there still remains a threat of internal and external risks creating obstacles.
Some optimism still exits over the economic growth recovery plan for 2017-2020 which displayed an encouraging outlook for the nation.
The four-year plan was built around achieving a healthy economic growth and sustainable development while the nation embarked on its quest to breaking away from oil reliance. With there being a very strong focus on the nation enhancing both public and private sector efficiency while also boosting overall productivity, the growth forecast of 7% by 2020 could become a reality if the protocol is followed.
Nigeria must do all it can to achieve a stable macroeconomic environment such as invest heavily in agriculture and bolster infrastructure investments to generate sustainable economic growth in the longer term.
Focusing on Nigeria’s macro fundamentals, economic data this quarter has been mixed with inflation cooling down for the first time in 15 months in February. While inflation has started to somewhat stabilize, the high unemployment remains a cause for concern which may become another stumbling block to stable economic growth.
The mixed economic data and lingering uncertainty still enshrouding Nigeria have encouraged the Central Bank of Nigeria to maintain a passive stance in its recent policy meeting. Although the sentiment towards the nation continues to display some early signs of improvement, long-term fears over decelerating economic growth still weigh heavily on sentiment.
While the Central Bank of Nigeria has intervened to somewhat quell the foreign exchange scarcity dilemma, the multiple exchanges is a damaging policy that even the IMF has urged the government to rectify.
Speaking of foreign exchange policies, the Naira currently trades around 390 on the parallel exchange after the Central Bank of Nigeria injected a mammoth $1.138 billion in the forex markets to meet bids for forwards.
While the repeated injections of Dollars in the foreign exchange may buoy the Naira, questions should be raised over the sustainability of this method. With the multiple exchanges still a major cause for concern that needs to be seriously dealt with, expectations remain heightened over the CBN taking further steps to fully bridge the gap in a sustainable way, ultimately creating one equilibrium currency exchange.
Although the Naira may be poised to appreciate further in the short term as the CBN continues to pump Dollars into the markets, the possibility of a currency devaluation in the future could expose the Naira to downside shocks.
Outside of Nigeria, the cautious attitude the Federal Reserve has adopted coupled with the renewed Trump jitters has exposed the Greenback to major downside risks. A vulnerable Dollar may pose some benefits to emerging markets with Nigeria on the list.
With the growing concerns over Trump’s economic policies punishing the Dollar, emerging market currencies may receive a boost as concerns ease of capital outflows.
With Trump already facing headwinds in the early stages of his presidency in enacting his policies, the threat of the protectionism becoming a reality may subside consequently reducing some pressures on emerging markets.
Looking at oil, prices were exposed to downside risks this quarter with WTI Crude tumbling towards $47 after optimism diminished over the effectiveness of OPEC’s supply cut agreement. The consistent buildup seen in U.S Crude stockpiles swiftly revived the oversupply fears while concerns over some OPEC members not fully respecting compliance cuts weighed heavily on sentiment.
Oil prices could be instore for further punishment moving forward with the bullish effect of last year’s unexpected production cut wearing off amid the global glut anxieties. A drop in oil prices may enforce further downside pressures on Nigeria which currently remains reliant on oil exports for a chunk of its government’s revenue.
As we enter the second quarter of the trading year, investors will be paying very close attention to economic data and if the nation is able to secure the $1.4 billion worth of international loans. The blueprints to a recovery are already in place and now actions must be taken to propel the nation away from recessionary levels.
With the IMF warning Nigeria that its economy needs urgent reforms with the government changing its exchange policy, the CBN may be prompted to intervene in an effort to create some stability while improving the chances of securing the critical loan needed.
On the foreign exchange side, although the combination of repeated interventions from the CBN and Dollar weakness may elevate the Naira, the long-term trajectory still tilts to the downside, especially when factoring a potential devaluation.
David Malpass, former World Bank President, has warned that Nigeria’s increasing reliance on collateral-backed and complex borrowing arrangements could make any future debt restructuring more difficult and discourage investors if the country’s debt position becomes unsustainable.
David Malpass, former World Bank President
Malpass, who was 13th president of the World Bank Group, from April 9, 2019 – June 1, 2023, raised the concern in a World Bank Policy Research Working Paper titled Public Debt and Central Banks, which was based on the Stanley Fischer Memorial Lecture delivered at the World Bank Group’s Annual Bank Conference on Development Economics.
He said increasingly sophisticated collateralised transactions in developing economies, including Nigeria, Angola and Senegal, were creating what he described as “a new race toward seniority in the capital structure.”
In sovereign lending, collateralised creditors may gain priority over other lenders by tying repayment to specific assets, revenues or financial instruments. Malpass warned that the expansion of such arrangements could leave fewer resources available for unsecured creditors and make negotiations more contentious during a debt crisis.
He also questioned the growing use of guarantee products provided by multilateral development banks, arguing that their effectiveness had not been adequately tested during sovereign debt restructurings.
According to him, private lending to distressed or high-risk governments has become less transparent, with some commercial agreements containing non-disclosure clauses that prevent citizens, investors and other creditors from understanding their full implications.
Malpass said debt reconciliation efforts were already being hindered by limited access to sovereign loan contracts, particularly agreements linked to Chinese lending programmes.
The former World Bank chief also criticised the international debt restructuring system, arguing that existing mechanisms had failed to provide timely and meaningful relief to heavily indebted countries.
Beyond debt transparency, Malpass identified exchange rate stability as an important requirement for Nigeria’s economic growth.
He grouped Nigeria with Ethiopia and Egypt among countries where multiple exchange rates and poorly managed currency systems had transferred wealth from low-income earners to politically or economically privileged groups.
He estimated Nigeria’s per capita income at about $1,500, or roughly $4 a day, while noting that median income was likely to be considerably lower because wealth remained concentrated among a small proportion of the population.
Malpass argued that the benefits of credible currency reform could be substantial, pointing to the significantly higher earnings of Nigerians working abroad as evidence of the country’s unrealised productive potential.
He disclosed that, while serving as World Bank president, he held several meetings with Nigeria’s previous administration, cabinet officials and the bank’s Nigeria team to identify reforms capable of accelerating economic growth.
Those discussions highlighted currency stabilisation, exchange rate unification, oil sector reforms, tax changes and agricultural liberalisation, particularly in rice production, as priorities.
Malpass said the reforms could transform Nigeria’s economy in a manner comparable to the policy changes that helped launch China’s sustained period of rapid growth in the 1990s.
Malpass’ warning comes amid continuing scrutiny of Nigeria’s use of unconventional financing to refinance expensive obligations and cover budget deficits.
The International Monetary Fund and Fitch Ratings had earlier raised concerns about the Federal Government’s proposed $5 billion Total Return Swap with First Abu Dhabi Bank, warning that derivatives-based sovereign borrowing could obscure the country’s true debt exposure and complicate future restructuring.
Despite those concerns, Nigeria reportedly accessed an initial tranche of about $1.5 billion from the arrangement.
The controversy follows years of debate over the transparency of Nigeria’s borrowing, including loans linked to crude oil revenues, infrastructure assets and bilateral agreements whose full terms were not always publicly disclosed. With debt-service costs consuming a substantial share of government revenue, the latest warning reinforces concerns that short-term financing relief could create more difficult obligations for future administrations.
Ecobank Nigeria has launched Scaling Up!!!, its flagship business storytelling podcast designed to inspire, educate and empower entrepreneurs, founders, business leaders and the next generation of African innovators through authentic conversations with some of the continent’s most accomplished business personalities.
The podcast, which will be available on Ecobank Nigeria’s official YouTube channel and other major digital streaming platforms, reinforces the bank’s commitment to supporting businesses beyond banking by creating a platform where entrepreneurs can learn from the experiences of successful founders, creatives and industry leaders who have built thriving enterprises across diverse sectors.
Featuring compelling conversations on entrepreneurship, leadership, innovation, resilience and business growth, Scaling Up!!! offers practical lessons and real-life insights that aspiring and established entrepreneurs can apply in building sustainable businesses.
The inaugural season features an impressive lineup of distinguished guests, including beauty entrepreneur and Founder/CEO of Beauty by AD, Adeola Adeyemi (Diiadem); renowned filmmaker and Founder of Golden Effects Pictures, Kunle Afolayan; veteran music producer and Founder of Coded Tunes, ID Cabasa; luxury fashion entrepreneur, Ejiro Amos Tafiri; celebrated commercial photographer, Emmanuel Oyeleke; Co-founder and Lead Interior Designer of Siriano Limited, Adewunmi Adegbola; and Founder of Windsor Gallery and Nahous Creative Hub, Richard Vedelago.
Each episode explores the guests’ entrepreneurial journeys, highlighting the opportunities they embraced, the challenges they overcame and the strategies that enabled them to build enduring brands and successful businesses.
Speaking on the launch, Austen Osokpor, Head, Marketing & Corporate Communications, Ecobank Nigeria, said: “Scaling Up!!! reflects Ecobank’s belief that empowering entrepreneurs goes beyond providing financial solutions.
“Through authentic storytelling and insightful conversations, we are creating a platform where business owners can learn directly from people who have successfully navigated the realities of building sustainable enterprises. It is another way we are reinforcing our commitment to driving entrepreneurship, innovation and economic growth across Africa.”
Also speaking, Head, SMEs, Partnerships & Collaborations, Ecobank Nigeria, Omoboye Odu, said: “Entrepreneurs learn best from the experiences of those who have walked the journey before them. Scaling Up!!! provides practical insights, inspiration and valuable lessons that will help founders make better business decisions, overcome challenges and unlock new opportunities for growth.
“The podcast further strengthens Ecobank’s role as a trusted partner supporting SMEs at every stage of their entrepreneurial journey.”
Sharing the creative vision behind the initiative, the Producer of Scaling Up!!!, Jemimah Ugiagbe, said: “Our goal was to create more than just another business podcast. We wanted honest, engaging and relatable conversations that reveal the realities behind success, the setbacks, the resilience, the bold decisions, and the lessons that every entrepreneur can learn from.
“Every episode is designed to leave listeners informed, inspired and motivated to build businesses that create lasting impact.”
The podcast further strengthens Ecobank Nigeria’s position as a trusted partner for entrepreneurs by providing a knowledge-sharing platform that extends beyond traditional banking services. GeographicReference
Through meaningful conversations with accomplished founders and innovators, the bank continues to demonstrate its commitment to fostering enterprise development, encouraging innovation and promoting sustainable economic growth across Africa.
Scaling Up!!! is targeted at SMEs, entrepreneurs, founders, startups, business executives, creatives, students and young professionals seeking practical business insights from some of Africa’s most respected industry leaders.
New episodes will be released regularly across Ecobank Nigeria’s YouTube channel and other major podcast streaming platforms, offering audiences thought-provoking conversations on entrepreneurship, leadership, innovation and business growth.
Ecobank Nigeria is a member of the Ecobank Group, the leading pan-African banking institution with operations in 33 African countries and international offices in London, Paris, Beijing, and Dubai.
With over 220 branches, more than 36,000 agency banking locations, and robust digital platforms, Ecobank delivers accessible, affordable, and instant banking services. The bank is strategically positioned to support pan-African trade, particularly under the African Continental Free Trade Area (AfCFTA).
S&P Global has agreed to acquire a majority stake in Agusto & Co., one of Africa’s oldest and largest domestic credit rating agencies, in a move that signals growing international interest in the continent’s capital markets and credit ecosystem.
According to a joint statement by the rating agencies. The transaction, which is subject to regulatory approvals, will give the global ratings giant a stronger foothold in Africa through Agusto & Co.’s operations in Nigeria, Kenya, Ghana, and Rwanda. Financial terms of the deal were not disclosed.
The acquisition marks one of the most significant investments by a global ratings agency in Africa’s domestic credit ratings market in recent years and comes as governments and companies across the continent increasingly rely on local debt markets to finance infrastructure, corporate expansion, and fiscal deficits.
Yann Le Pallec, president of S&P Global Ratings, said the investment reflects the company’s long-term commitment to Africa’s financial markets.
“We are delighted to partner with Agusto & Co. to strengthen our domestic ratings presence across Africa,” Le Pallec said. “This transaction underscores our commitment to supporting growth and transparency in local credit markets throughout the continent.”
He added that combining S&P Global’s international analytical capabilities with Agusto & Co.’s local market knowledge would help improve credit transparency and support investor confidence across African markets.
Founded more than three decades ago, Agusto & Co. has built a reputation as one of Africa’s leading domestic rating agencies, providing credit ratings on banks, corporates, and other institutions. The company has expanded beyond Nigeria into several African markets and has played a key role in the development of domestic bond markets.
For Agusto & Co., the transaction represents a major milestone in its growth strategy and fulfills a long-held ambition to align with a global ratings institution.
“This partnership is a transformational milestone for Agusto & Co. and African capital markets, fulfilling our late founder’s vision of affiliating with a leading global rating agency,” said Yinka Adelekan, managing director of Agusto & Co.
According to Adelekan, the combination of Agusto’s regional expertise with S&P Global’s international resources and analytical network is expected to create broader opportunities for issuers and investors while supporting more transparent and resilient credit markets across Africa.
Despite the ownership change, Agusto & Co. said it will continue operating as an independent domestic ratings agency, maintaining its own rating methodologies and issuing ratings under applicable regulatory frameworks.
That structure is expected to preserve the agency’s regulatory standing in the jurisdictions where it operates while enabling it to benefit from S&P Global’s technology, research capabilities, and global market expertise.
The acquisition also reflects increasing global interest in Africa’s capital markets, where governments are pursuing domestic borrowing strategies and private companies are seeking alternative sources of long-term financing amid tighter global liquidity conditions.
The transaction is expected to close in the second half of 2026, subject to regulatory approvals and other customary closing conditions. S&P Global said the acquisition is not expected to have a material impact on its financial results.
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