Fitch says Nigeria needs structural reforms in power and oil sectors

The bill to reform oil taxes and licenses and overhaul the state oil company should help unlock billion of dollars in new investments in the oil industry but has been delayed by political wrangling and objections from oil majors.  Fitch’s Fox said April’s rebasing of Nigerian GDP to $510 billion – pushing it past South Africa to become Africa’s top economy – had no ratings impact.

But a further fall in foreign reserves could trigger a negative rating action if it caused significant naira weakness, he warned.  Nigeria’s foreign reserves were down 22 percent year-on-year at $38.14 billion as at end-April, depleted by central bank efforts to support the local currency.  The naira has weakened almost 3 percent this year as importers have bought dollars and offshore investors have quit the local bond market.