FG targets N5.84trn savings with investment status

The Federal Government on Thursday said Nigeria could save an estimated N5.84 trillion annually in borrowing costs if it secures an investment grade sovereign credit rating, as it intensified efforts to strengthen the country’s credit profile and improve access to affordable long term financing.

The government disclosed this at a high-level debriefing meeting on the Sovereign Credit Ratings Needs Assessment Mission in Abuja, where stakeholders reviewed preliminary findings from a four-day assessment aimed at improving Nigeria’s sovereign creditworthiness and investor confidence.

According to Investopedia, an investment grade credit rating is a classification indicating that a bond or issuer has a relatively low risk of default.

Representing the Minister of Finance and Coordinating Minister of the Economy, the Permanent Secretary (Special Duties), Federal Ministry of Finance, Mohammed Sanusi Danjuma, said the government’s objective was to ensure Nigeria’s sovereign credit profile accurately reflected the progress of its economic reforms and the country’s long-term growth potential.

He said recent reforms, including the removal of fuel subsidy, foreign exchange market reforms, strengthened monetary policy and technology-driven tax administration, had improved macroeconomic stability and boosted investor confidence.

“Our objective is not merely to secure higher ratings but to ensure that Nigeria’s credit profile accurately reflects the progress of our reforms and the vast opportunities within our economy,” he said.

Danjuma added that achieving investment grade status could reduce Nigeria’s borrowing costs by between 100 and 150 basis points, generating estimated annual savings of about N5.84 trillion that could be redirected to infrastructure, healthcare, education, social protection and other critical development priorities.

He noted that recent rating actions by Moody’s, Fitch Ratings and S&P Global Ratings, alongside the favourable assessment of Nigeria’s reform programme during the International Monetary Fund’s Article IV Consultation, reflected growing confidence in the economy.

Special Adviser to President Bola Tinubu on Economic Matters, Dr. Tope Fasua, said the Presidency had thrown its weight behind the initiative, describing improved sovereign credit ratings as critical to achieving the administration’s economic agenda.

He said Nigeria should target investment-grade status by 2030 to align with President Bola Tinubu’s ambition of building a $1 trillion economy, adding that the reforms already undertaken had laid the foundation for stronger sovereign ratings.

Fasua noted that sovereign credit ratings influence not only borrowing costs but also investor confidence, international perception and diplomatic engagement.

“The things we say about our country sometimes become part of how international lenders and investors price Nigeria. Credit ratings have implications beyond finance,” he said.

Chief Economist for Africa at the United Nations Development Programme (UNDP), Raymond Gilpin, said sovereign credit ratings had become one of the most important measures used by investors in assessing African economies as access to concessional financing continued to shrink.

He said UNDP’s analysis showed that perception gaps and subjectivity in sovereign credit assessments cost African countries about $74.5 billion annually in additional borrowing costs, making stronger sovereign credit profiles increasingly important for development financing.

“Credit ratings determine how markets view risk in developing countries. For many African countries, including Nigeria, they are probably the most important metric investors consider,” he said.

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