International rating agency, Standard & Poor’s, has warned that Nigeria’s economy is in a “clear and present danger,” even as data released by the National Bureau of Statistics, NBS, revealed that Nigeria earned N12.8 trillion from crude oil export in 2014.
The rating agency, in a presentation by Konrad Reuss, Regional Manager, sub-Saharan Africa, put Nigeria on a negative sovereign ratings watch, BB minus.
According to Reuss, the factors putting the Nigerian economy in danger include the Boko Haram insurgency, the fall in oil prices, because of the importance of oil for government and export revenues, as well as the forthcoming elections.
Reuss explained that Standard & Poor’s rated Nigeria based on its six main categories and found out that Nigeria was weak in three classifications, namely: institutional and governance effectiveness, economic structure and growth, fiscal flexibility and performance.
In addition, Reuss who was addressing a seminar on Nigeria in Sandton, north of Johannesburg, said Nigeria was classified as neutral in external liquidity and international investment position and monetary flexibility, while its only area of strength was in its debt burden.
Reuss explained that the reason economic structure and growth was identified as a weakness was because of weakness in the structure of the economy and not the country’s growth rate, adding that the structural problems were not being offset by the good growth.
Despite the uncertainty over the forthcoming elections, Reuss, however, cautioned that elections did not automatically deliver bad results, adding that they could deliver good ones.
“Despite these concerns, Nigeria remained in the middle of the sovereign ratings rankings for Africa. Notwithstanding the negative watch, I like Nigeria, it is a diversified economy. It has an interesting private sector.
“Ratings are really about credit-worthiness. If we did downgrade Nigeria, it would have little effect on its borrowing.
“It would be more an issue of the country’s image. From a debt perspective, even if there was a downgrade, Nigeria would still look solid,” he said.
Similarly, a coalition of Civil Society Organisations, under the aegis of Centre for Social Justice, CSJ, in conjunction with the United States Agency for International Development, USAID and International Foundation for Electoral Systems, IFES, have raised an alarm over the threat posed to the growth of the Nigerian economy by the huge spending by political parties in the build up to the elections.
According to a report titled, ‘Second campaign finance and use of state administrative resources report in the 2015 presidential election,’ Eze Onyekpere, Lead Director, CSJ, said the increasing expenditure pattern of the parties will impact the Nigerian economy negatively.
“Although declining oil prices contributed to Nigeria’s deteriorating macroeconomic fundamentals, the coincidence of campaign spending and the acceleration of the deterioration brings to the fore the inextricable link between election spending and the health of the economy.
“With the attention shifted from governance and a lot of expenditure on campaigns, the state of the economy in terms of depreciating exchange rate, inflation and reduced economic growth were bound to occur,” he said.
The report put the total amount spent so far by the two major political parties — People Democratic party (PDP) and the All Progressives Congress (APC) and their supporters in advertisements in the print medium at N1.382 billion.
Specifically, Onyekpere said, “The total up to February 14, 2015 for the APC presidential candidate is N332.583 million, while the total up to February 14, 2015 for the PDP presidential candidate is N1.049 billion.”
The report further listed other expenses as: campaign rallies — N1.057 billion for PDP and Dr. Goodluck Jonathan, N595.082 million for APC and Muhammed Buhari; Bill boards — N155.13 million for PDP and N99.23 million for APC.
Electronic media campaign coverage for the presidential candidates were put at N508.35 million for the PDP, N391.05 million for the APC, while electronic media adverts were put at N7.339 million and N5.556 million for the PDP and PDP respectively, bringing the total to N2.5 billion and N1.091 billion for the PDP and the APC respectively.
In general, the report aggregated the summary of all presidential campaign expenses at N4.973 billion, broken down as PDP — N3.549 billion; APC — N1.424 billion.
Onyekpere, however, recommended that, “All persons, associations and organisations who have sought to induce voters with money and materials should be prosecuted in accordance with Section 124 of the Electoral Act 2010 (as amended).
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