Tinubu’s Reforms: S&P Upgrades Nigeria’s Outlook to Stable

*Analysts warn country may face geopolitical risks over Niger
 *GlaxoSmithKline’s exit, bad omen for Nigeria’s business environment, Atiku, Obi lament

Global rating agency, Standard and Poor’s (S&P) has upgraded Nigeria’s credit outlook to stable from negative on President Bola Ahmed Tinubu’s planned reforms.
However, despite the improved rating, the debt assessor still scored Nigeria at B-, six notches into junk and on par with Bolivia and Barbados.
It also warned that Nigeria may also face geopolitical risks tied to the recent coup in neighboring Niger.
This is coming as the presidential candidate of the Peoples Democratic Party (PDP) in the 2023 general election, Atiku Abubakar, and his counterpart in the Labour Party (LP), Peter Obi have lamented the planned exit of the British pharmaceutical giant, GlaxoSmithKline (GSK), from Nigeria after more than five decades of operation.

Both opposition leaders said the development was a sign that all is not well with the country’s business environment.
In a statement, S&P Global Ratings acknowledged that the improved outlook comes after Nigeria’s new leader scrapped costly fuel subsidies, removed the Governor of the Central Bank of Nigeria (CBN), and overhauled the nation’s exchange rate policies.
According to analysts, Ravi Bhatia, Samira Mensah, and Juili Pargaonkar, “the new government is moving ahead with a series of reforms that could, if delivered, benefit growth and fiscal outcomes.”  
“We believe these measures will gradually benefit Nigeria’s public finances and its balance of payments,” the analysts added.
However, the analysts noted that Nigeria’s planned fiscal spending and inflation remain high, adding that Nigeria and other countries in the West African region may also face geopolitical risks tied to the recent coup in neighboring Niger.
The World Bank had projected that Nigeria could save up to N3.9 trillion this year alone from reforms but warned of growing short-term inflationary pressures.
 S&P’s sovereign analyst, Frank Gill had last month stated that the ratings agency was closely watching Nigeria ahead of its review on August 4, adding that recent reforms were positive signs.

The global rating agency had in February maintained Nigeria’s credit rating at “B-/B” but changed its outlook to “negative”, while rival Fitch affirmed Nigeria at ‘B-’ in May.
A raft of measures taken by Tinubu soon after his inauguration on May 29, including the removal of the contentious subsidy on petrol and the unification of the exchange rate of the naira is already ruffling feathers.
Although multilateral lenders, the International Monetary Fund (IMF); the World Bank, and foreign investors, among others, have hailed the measures, most Nigerians are currently facing unprecedented hardship caused by the high cost of living due to subsidy removal.
The organised labour is currently embroiled in a face-off with the federal government over subsidy removal without putting measures in place to cushion the impact on vulnerable Nigerians.

GlaxoSmithKline’s Exit, Bad Omen for Nigeria’s Business Environment, Atiku, Obi Lament

Meanwhile, the presidential candidate of the PDP in the 2023 general election, Atiku, and his counterpart in the LP, Obi have lamented the planned exit of British pharmaceutical giant, GlaxoSmithKline (GSK), from Nigeria after more than five decades of operation, saying the development was a sign that all is not well with the country’s business environment.
Both opposition figures reacted to the development through their various verified social media handles at the weekend.
Atiku wrote: “The planned exit of GlaxoSmithKline (GSK) from Nigeria after more than five decades of doing business in Nigeria underscores how horrific the environment has become for both local and foreign businesses. Sadly, many international firms have, in recent times, sold their assets and bid farewell to Nigeria after several years of operating in our country.

“These exits have led to further loss of jobs in an environment that is already bleeding jobs. We need to do a lot more not only to encourage investors to make Nigeria their preferred destination but also to encourage companies already operating in our land not to “japa.” To this end, we must revamp our infrastructure, endeavour to enthrone a sustainable regime of energy security, and retool our fiscal and monetary policy. -AA.”
Obi, who took to his verified Twitter handle to react to the news, said GSK’s reason to quit was even more disturbing as they no longer perceive a prospect for the country as a business environment that would be anchored on.
Obi described as saddening the exit of the pharmaceutical giant from Nigeria after 51 years of operations.
Obi in a series of tweets, yesterday said the company’s reason for leaving Nigeria portends a gloomy future for the country’s investment climate.
“Today, I was saddened to hear that GlaxoSmithKline (GSK), is exiting Nigeria after 51 years of operations.
“Their reason for leaving Nigeria is even more disheartening, that they are no longer perceiving any future growth of the country, which will be anchored on productivity.

The former Anambra State governor, noted painfully that Nigeria was at the point where multinationals are leaving the country and the local ones are closing down due to the consequences of poor management of the economy.
He noted that this has resulted in millions losing their jobs and poverty index worsening even as the country is already the world’s poverty capital.
“These multinationals leaving our country, not only create jobs but create immeasurable training that contributes immensely to our human capital development.
“GSK which has a manufacturing facility set up in Agbara, on over 25 hectares of land in Agbara, had directly employed over 400 highly technical workers like pharmacists, microbiologists, biochemists, chemists, dentists, doctors etc, and also employed over 1,000 other staff.
“It indirectly provided jobs and business opportunities for thousands of Nigerians across the nation. They are now leaving all these behind, and pushing more people back into unemployment.”

Obi recalled his consistent position that “in turning our nation around, we must move the economy from consumption to production, part of which included encouraging and supporting local and foreign investments, like GSK, in the country.”
He stressed the importance of creating an environment that creates and sustains multinationals to invest in the country, adding that “this is key to our dream of greatness. In the new Nigeria that we seek to create, the emphasis on production will encourage investors to stay and expand on our shores.”
GlaxoSmithKline Consumer Nigeria Plc had announced plans to shut down its operations in the country.
In a statement on Friday, the multinational company, whose primary activities include marketing and distribution of consumer healthcare and pharmaceutical products, said that its parent company, GSK Plc UK, had revealed its intent to cease commercialisation of its prescription medicines and vaccines through its Nigerian subsidiary.

Ndubuisi Francis and Gabriel Emameh in Abuja

Follow us on: