Fitch downgrades Nigeria long-term ratings

 Muhammadi Buhari ( File :AP)
Muhammadi Buhari ( File :AP)

Lagos  - The ratings agency Fitch downgraded the outlook on Nigeria's long-term debt on Wednesday, as the west African country experiences "the most challenging economic situation in its history", according to its president, Muhammadu Buhari.

Fitch said in a statement that it had revised the outlook on Nigeria's long-term ratings "to negative from stable."

"Tight foreign exchange liquidity and low oil production contributed to Nigeria's first recession since 1994," the statement said.

Nigeria is experiencing its worst economic crisis in years following a collapse in global oil prices which form the bulk of its government revenue.

"The economy contracted through the first three quarters of 2016" and Fitch estimated a contraction of around 1.5% in gross domestic product (GDP) in 2016 as a whole.

"We expect a limited economic recovery in 2017, with growth of 1.5%, well below the 2011-15 annual growth average of 4.8%," the ratings agency continued.

Falling global oil prices and repeated attacks on crude infrastructure in Nigeria's south severely hit the country's economy in 2016, hammering the naira currency against the dollar.

Nigeria, which gets over 70% of its revenue from oil, is now suffering from a debilitating shortage of foreign exchange, hitting imports and overseas investment.

While the official rate is around 305 naira to the dollar, many Nigerian businesses are being forced to buy dollars on the black market, where the rate is upwards of 490 to the dollar.

Fitch said that Nigeria would continue to suffer low growth if foreign exchange continued to be in short supply and if the government could not narrow the fiscal deficit.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Lockdown For
DAYS
HRS
MINS
Voting Booth
When planning for the Black Friday sales do you:
Please select an option Oops! Something went wrong, please try again later.
Results
Save, research and plan ahead, preparing to make the most of it?
7% - 988 votes
Wait and see what looks like a good deal on the day?
14% - 1878 votes
Have no interest in spending more money this year?
79% - 10539 votes
Vote
ZAR/USD
15.20
(-0.63)
ZAR/GBP
20.32
(-0.45)
ZAR/EUR
18.12
(-0.61)
ZAR/AUD
11.20
(-0.65)
ZAR/JPY
0.15
(-0.78)
Gold
1809.97
(+0.12)
Silver
23.29
(-0.15)
Platinum
963.00
(+0.40)
Brent Crude
48.73
(+1.57)
Palladium
2368.48
(+2.46)
All Share
57923.69
(+0.31)
Top 40
53084.13
(+0.27)
Financial 15
11645.28
(+0.04)
Industrial 25
79993.34
(+0.20)
Resource 10
52790.93
(+0.35)
All JSE data delayed by at least 15 minutes morningstar logo