Business
Fitch Affirms Nigeria at ‘BB-‘; Outlook Stable
Fitch Ratings, a UK based rating firm has re-affirmed Nigeria’s Long-term foreign and local currency debt repayment default (IDR) at ‘BB-‘ and ‘BB’, respectively. The Outlooks of the Nigerian economy and chances of defaulting in debt repayment they said are Stable.
According to the Rating Agency report released yesterday in London “The issue ratings on Nigeria’s senior unsecured foreign and local currency bonds have also been affirmed at ‘BB-‘ and ‘BB’, respectively. The agency has also affirmed Nigeria’s Short-term foreign currency IDR at ‘B’ and Country Ceiling at ‘BB-‘.
Fitch rating is coming on the heels of Nigeria’s GDP rebasing and has a mixed impact on key sovereign rating metrics, and therefore no automatic implications for Nigeria’s BB-/Stable sovereign rating. The GDP uplift affects some key rating metrics positively and some negatively. 2013 per capita GDP rises by 89 per cent to $2,900 on Fitch’s calculations. But it remains below both the ‘BB’ and ‘B’ category peer group medians of $4,528 and $3,841, respectively.
It is also below similarly rated oil exporters Gabon (USD10,688) and Angola (USD 5,703).
Per capita GDP ranking relative to other countries is more important in our sovereign rating methodology than the absolute level. Nigeria overtakes just three Fitch-rated sovereigns – Vietnam (B+), Philippines (BBB-) and Bolivia (BB-) – following the uplift. The other main positive impact is on public debt indicators, which are already a rating strength and now look even stronger. 2013 debt-to-GDP drops to 11.6% from 22% and the average deficit-to-GDP ratio is just 1.4% over the past three years (both calculated on a general government basis). However, Nigeria’s low non-oil fiscal revenue now looks even lower at just 3.8% of GDP (2013 Fitch estimate).
The GDP uplift puts some other key metrics in a poorer light. The 2013 current account surplus shrinks to 4.1% of GDP (and is likely to be overstated given the large errors and omissions in the balance of payments). Foreign direct investment drops to less than 1% of GDP, among the lowest in the region. Broad money – a proxy for financial market development and banking sector penetration – also declines, from one-third of GDP to less than one-fifth of GDP.
So the rebasing exercise itself has no rating impact overall. Nevertheless, the results are likely to be credit positive in the longer term as perceptions of Nigeria as an investment destination improve. The rebasing also highlights the importance of data quality, which is taken into account in the rating process.
The NBS early in the Month released the results of a major overhaul and update of Nigeria’s national accounts, including shifting the base year forward by 20 years to 2010. This allows the better capture of a number of economic sectors which have appeared over this period. This uplift raises Nigerian GDP in USD terms in 2013 to USD504bn on Fitch calculations, making it the largest economy in Africa, and the 26th-largest in the world on World Bank calculations. Contact:
The affirmation reflects the following key rating drivers:
Fitch ratings said that “The foreign exchange market and international reserves are stabilising after the shock of central bank (CBN) governor Sanusi’s suspension on 20 February. Demand for foreign exchange in the official auction reverted to normal levels in March and CBN intervention in the inter-bank market has fallen away. The inter-bank naira/US dollar rate has strengthened from its lows although it remains outside the upper limit of the 155 plus or minus 3% band.
“Official reserves rose in March, helped by an increase in the ECA fiscal buffer (Excess Crude Account). Although reserves have fallen appreciably over the past year, they remain in line with ‘BB’ category peer medians at a Fitch projected 4.6 months current account payments (CXP) at end 2014, although weaker than similarly rated oil exporters (Angola and Gabon).
It said that on 25 March the Monetary Policy Committee continued the gradual tightening of liquidity seen over the past year, with an increase in the private sector cash reserve requirement to 15 per cent. Inflation fell to a new low of 7.7 per cent in February, within the target range of 6-9 per cent. Fitch believes that as an institution, the CBN has been strengthened in recent years and should retain its autonomy over monetary and financial policy, notwithstanding the suspension of the former governor.
Oil production remains volatile but rose in 1Q14 to average 2.25mb/d, in line with the trailing 12-month average, and above the recent low of 2.1mb/d in November/December 2013. Improved production and increased efforts to tackle pipeline vandalism and oil theft may help explain the increase in the ECA in March. The issue of corruption in the oil sector and lack of transparency in oil flows has gained heightened prominence this year and the President has agreed to a forensic audit of the flows between state-owned oil company NNPC and the budget.
A tight budget has been approved. It assumes a conservative oil price of USD77.5/bl and a more realistic oil production assumption of 2.39mb/d. Although production shortfalls are likely to continue, allowing further drawing on the ECA, the authorities aim to increase the ECA this year. The budget envisages a fall in revenue and spending, although the latter will be achieved mainly through a more realistic assessment of capital spending capacity.
Other factors supportive of the affirmation the rating agency said include:
Nigeria’s low debt burden, which after the recent GDP re-basing is just 12.6 per cent of GDP (general government) at end-2013, is well below medians throughout the rating scale. Fitch’s debt sustainability analysis shows the debt ratio would remain well below the ‘BB’ median in any plausible scenario.
Continued strong growth, which has averaged 6.8 per cent over the past five years, led by non-oil growth of an average 7.7 per cent. Revised national accounts show growth accelerated to 7.4 per cent in 2013, with a 5.2 per cent increase in the energy sector as gas production increased, notwithstanding a fall in oil production.
The GDP rebasing shows a more diversified economy, with the non-oil sector comprising 86 per cent of GDP and services now put at 52 per cent of GDP (previously 29 per cent) with the oil and agriculture sectors now having a reduced share in GDP. Nigeria’s sovereign and overall external balance sheets, current account surplus, debt service ratio and external liquidity are all stronger than ‘BB’ category medians Fitch said.
However, it said that the current surplus has been declining (4.1% of GDP in 2013) and may be overstated given large errors and omissions. FDI is less than 1 per cent of GDP, amongst the lowest in the region.
Reform progress remains mixed. Electricity generators and distributors are now in private hands but transmission remains a problem and output remains volatile, affected by gas supply and other problems. Agricultural reforms continue to gain traction, leading to higher output and a reduced import bill. However, the Petroleum Industry Bill (PIB) remains stalled. Strong vested interests make structural reform a continual struggle.
Nigeria’s ratings are constrained by weak governance, as measured by the World Bank, low per capita income, even after the 89% uplift to 2013 GDP due to rebasing, and vulnerability of public finances and reserves to oil price volatility. Political noise has increased this year ahead of the February 2015 presidential and gubernatorial elections. The Boko Haram insurgency has also intensified this year, though is geographically contained.
It said “The main factors that individually or collectively might lead to rating action are as follows: accelerated structural reforms that bring faster, more inclusive growth and higher employment and per capita incomes; signs of a sustained increase in electricity production and passage of the PIB would be especially positive; a longer track record of low single-digit inflation; improved external buffers, either in the ECA or the new Sovereign Wealth Fund (NSIA); improved governance as reflected in World Bank and anti-corruption indicators”.
It further said “Renewed pressure on reserves that further depletes Nigeria’s fiscal and external buffers; reversal of key structural reforms; a serious deterioration in domestic security, whether stemming from terrorism or election-related violence”.
Fitch said that “Nigeria is highly dependent on oil for fiscal and external revenue and assumes Brent crude will average $105/bl in 2014 and $100/bl in 2015. Fitch assumes the current stance of relatively conservative macro policy and incremental structural reform will remain in place in the forecast period, which goes up to the election year of 2015. “In particular, no significant fiscal spending overruns are assumed. At the same time, no significant acceleration in non-oil growth or net exports has been assumed nor any further reduction in petroleum subsidies, which would benefit public and external finances.
“Fitch believes passage of the PIB before the election is unlikely, but failure to do so is assumed not to have any serious short-term impact on oil production.
“However, oil theft and associated capacity shutdowns are assumed to continue, although not worsen, meaning average oil output will remain around 2.2mb/d, significantly below potential of 2.5mb/d. It is also assumed that there is no major resurgence of violence in the Delta region.
The Boko Haram terrorist insurgency is assumed to remain contained and not to have serious consequences for economic performance.
National Bureau of Statistics has said that Nigeria’s Company Income Tax rose sharply in the second quarter of 2025, hitting N2.78 trillion.
The figure represents a significant 40.27 per cent increase compared to the N1.98 trillion recorded in the first quarter of the year, reflecting both improved tax compliance and stronger corporate performance across key economic sectors.
The NBS report said that domestic company income tax payments accounted for the bulk of the revenue, contributing N2.31 trillion, while offshore collections stood at N469.36 billion during the period under review.
According to the NBS, the financial and insurance sector recorded the highest quarter-on-quarter growth, rising by an astonishing 772.29 per cent, driven by improved profitability among banks, fintechs, and insurance firms following robust half-year earnings.
This, according to NBS, was followed by wholesale and retail trade, as well as motor vehicle repair activities, which grew by 538.38%.
Activities of households as employers also surged by 526.79%, although their overall contribution to total company income tax remained negligible.
On the flip side, some sectors experienced sharp declines in company income tax remittances.
Activities of extraterritorial organizations and bodies dropped by –45.01%, while education, public administration, defence, and compulsory social security recorded declines of –26.61% and –18.17% respectively.
The contraction in these sectors, particularly education and public administration, highlights persistent structural and fiscal challenges confronting government-funded institutions.
In terms of contribution to total tax revenue, financial and insurance activities led with a dominant 44.13%, reflecting the sector’s continuing expansion and strong capital flows.
Manufacturing followed with 15.57%, bolstered by increased production output and improved supply chain activity.
Mining and quarrying ranked third, contributing 9.18%, supported by higher commodity prices and renewed interest in solid mineral development.
At the bottom of the contribution chart were activities of households as employers, which accounted for just 0.01%, as well as activities of extraterritorial organizations and bodies, and water supply, sewerage, waste management, and remediation services, each contributing 0.04%. Despite economic headwinds, year-on-year company income tax collection still rose by 12.66% when compared to Q2 2024, underscoring moderate but steady improvement in government revenue mobilisation.
Company income tax collection in the same period of 2024 rose by 150.83 per cent N2.47 trillion. In the first three months of the year, company income tax collection stood at N984.61 billion. According to the report, local payments in the period under review amounted to N1.35 trillion, while foreign CIT payments contributed N1.12 trillion. On a quarter-on-quarter basis, the agriculture, forestry, and fishing sectors exhibited the highest growth rate at 474.50%, followed by financial and insurance activities at 429.76%, and manufacturing at 414.15%.
Lagos State government has reaffirmed its unwavering commitment to supporting micro, small, and medium enterprises (MSMEs) across the state through visibility, capacity building, and market access. Commissioner for Commerce, Cooperatives, Trade, and Investment, Folashade Ambrose-Medebem, made the pledge on Sunday at the closing ceremony of the 2025 Lagos International Trade Fair (LITF). The 38th edition of the event, organised by the Lagos Chamber of Commerce and Industry (LCCI), had its theme as “Connecting Business, Creating Value.”
Ms Ambrose-Medebem said every entrepreneur, regardless of scale, deserves an enabling environment to thrive and contribute meaningfully to the state’s economic prosperity. She said the state, through strategic investments in infrastructure, institutional reforms, and continuous engagement with the private sector, was building a Lagos that worked for business. The commissioner added that the state would continue to foster innovation, competitiveness, and sustainability.
“As a government, we remain steadfast in our commitment to making Lagos the preferred destination for commerce and enterprise. This fair has once again demonstrated the power of connection: connection between producers and consumers, investors and innovators, the government and the private sector, and local entrepreneurs and global brands. Every handshake, every conversation, every business card exchanged here is a building block toward the future we are creating, a future of prosperity that leaves no one behind,” she said.
The commissioner urged businesses to continue to connect, collaborate, and create value, saying, “In Lagos, we do not just trade goods; we trade ideas, build futures, and transform lives. “Together, let us continue to make Lagos not just a place of commerce, but a symbol of progress, innovation, and endless opportunity.” Gabriel Idahosa, president of LCCI, urged governments at all levels to continue addressing the issues of creating an enabling environment in the country.Mr Idahosa said focus should be on infrastructure, security, and implementing the right policies to address the key drivers of high inflation.
This, he said, was needed to fully harness the vast enterprising resources of domestic and foreign investors for the diversification of our economy and the welfare of our people. He pledged the commitment of the organised private sector to stand solidly behind the state in its quest to actualise its innovative initiatives on all fronts. NAN
Jumia Technologies AG posts a $17.7 million loss before income tax in the third quarter of 2025, down 1% year-on-year from $17.8 million in the third quarter of 2024. The road to profitability has remained long as ecommerce continues to face uncertainties, including widening competition with rivals in the same industry. The e-commerce company revenue came in at $45.6 million compared to $36.4 million in the third quarter of 2024, representing a 25% year-over-year surge in the period. The company reported gross merchandise value of $197.2 million compared to $162.9 million in the third quarter of 2024, up 21% year-over-year. Excluding South Africa and Tunisia, physical goods GMV grew 26% year-over-year, Jumia revealed in the unaudited financials.
Jumia said in its report that the GMV growth was driven by supply and strong marketing execution, partially offset by lower corporate sales in Egypt. Excluding corporate sales, GMV in reported currency grew 37% year-over-year. Nigeria’s momentum accelerated, with order growth up 30% and GMV up 43% year-over-year, Jumia said. The e-commerce giant’s operating loss reduced by 13% year-over-year to $17.4 million compared to $20.1 million in the third quarter of 2024. The company’s adjusted earnings before interest tax depreciation and amortisation loss dropped by 17% to $14.0 million compared to $17.0 million in the third quarter of 2024.
Jumia reported a loss before income tax of $17.7 million, a slight reduction of 1% compared to $17.8 million in the third quarter of 2024. Liquidity printed at $82.5 million, a decrease of $15.8 million in the third quarter of 2025, compared to an increase of $71.8 million in the third quarter of 2024, which included the net proceeds from the August 2024 At-the-Market (ATM) offering, and a decrease of $12.4 million in the second quarter of 2025.
Its net cash flow used in operating activities settled at $12.4 million compared to net cash flow used in operating activities of $26.8 million in the third quarter of 2024 and $12.7 million used in the second quarter of 2025. The result includes a positive working capital contribution of $0.4 million.
Jumia reported that customers’ orders grew 34% year-over-year, driven by strong execution, enhanced product assortment, and healthy consumer demand across key categories. It said quarterly active customers ordering physical goods grew by 23% year-over-year, highlighting continued engagement and customer loyalty. As of September 30, 2025, the Company’s liquidity position was $82.5 million, comprised of $81.5 million in cash and cash equivalents and $1.0 million in term deposits and other financial assets, it said in the report Jumia’s liquidity position decreased by $15.8 million in the third quarter of 2025, compared to an increase of $71.8 million in the third quarter of 2024, which included net proceeds from the August 2024 At-the-Market (ATM) offering, and a decrease of $12.4 million in the second quarter of 2025.
Net cash used in operating activities was $12.4 million in the third quarter of 2025, compared to a net cash used of $26.8 million in the third quarter of 2024 and $12.7 million used in the second quarter of 2025. The result includes a positive working capital contribution of $0.4 million in the third quarter of 2025, compared to a negative working capital contribution of $9.1 million in the third quarter of 2024, primarily reflecting improvements in operating performance.
In addition, the Company reported $1.4 million in capital expenditures in the third quarter of 2025, compared to $0.9 million in the third quarter of 2024, primarily reflecting investments in infrastructure and facility enhancements to support business growth. “This quarter marks a significant acceleration in customer demand and order growth, driven by strong execution across our markets and growing consumer trust in the Jumia brand. We believe Jumia has reached an inflection point as our compelling value proposition, and improved operational discipline position us for sustainable, profitable growth.
“We continue to strengthen our cost structure and sharpen operational discipline, reinforcing our path toward profitability. Our focus remains on execution and customer engagement as we build a more efficient business.
“We believe that we are on track to reach breakeven on a Loss before Income tax basis in Q4 2026 and achieve full-year profitability in 2027, positioning Jumia for long-term growth and value creation.”
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