FG, UNDP commence drive to improve Nigeria’s credit rating

…Cut borrowing costs

Emma Ujah, Abuja Bureau Chief

The Federal Government, in partnership with the United Nations Development Programme (UNDP), has begun efforts to improve Nigeria’s sovereign credit ratings as part of a broader strategy to reduce the country’s borrowing costs and attract more investment.

Speaking at the High-Level Debriefing Meeting on the Credit Ratings Needs Assessment Mission for Nigeria in Abuja yesterday, the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, said African countries have for years paid an estimated $74.5 billion annually in additional borrowing costs due to what is widely described as the “African Premium.”

Represented by the Permanent Secretary (Special Duties) in the Ministry, Mr. Mohammed Sanusi, the Minister said the premium was largely the result of perception rather than economic fundamentals.

He said, “For too long, African countries have borne what is often described as the African Premium—a perception gap estimated to cost the continent more than $74.5 billion annually in additional borrowing costs.

“Our focus today is not on the shortcomings of the global financial architecture but on strengthening our institutions, improving engagement with international credit rating agencies, and ensuring that Nigeria’s sovereign ratings accurately reflect the resilience and potential of our economy.”

Oyedele noted that the Federal Government’s ongoing economic reforms were already yielding positive results, as reflected in recent assessments by international rating agencies.

According to him, recent rating actions by Moody’s, Fitch Ratings and S&P Global Ratings, as well as the favourable outcome of the IMF Article IV Consultation, demonstrate growing confidence in Nigeria’s economy.

He stressed, however, that sovereign ratings depend not only on economic performance but also on the quality of data, institutional coordination, policy credibility, effective communication and sustained engagement with rating agencies.

“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 added.

The UNDP Chief Economist for Africa, Mr. Raymond Gilpin, said declining development assistance has made access to affordable financing increasingly critical for African countries.

According to him, Official Development Assistance has fallen sharply over the past two decades, while many African countries have graduated to middle-income status, reducing their access to concessional funding even as their financing needs continue to rise.

“Traditional development assistance is declining, and many countries now rely more on the capital market to finance development. At the same time, financing the Sustainable Development Goals and the African Union’s Agenda 2063 has become increasingly difficult,” he said.

Gilpin noted that governments across the continent now face the difficult choice of allocating scarce resources either to debt servicing or to investments in infrastructure, poverty reduction and technology.

He described sovereign credit ratings as a key determinant of development financing, saying they shape investors’ perception of risk.

“Credit ratings determine how global investors assess the risks of investing in developing countries. Improving those ratings is therefore essential to attracting affordable capital and unlocking long-term development financing,” he said.

To address the challenge, Gilpin said the Africa Credit Ratings Initiative was established by the UNDP in partnership with the African Development Bank (AfDB), United Nations Economic Commission for Africa (UNECA), Africa Centre for Economic Transformation (ACET) and the African Peer Review Mechanism (APRM).

He explained that the initiative helps African governments strengthen engagement with international rating agencies, improve data quality and build institutional capacity.

As part of the programme, the UNDP recently sponsored 22 senior officials from 11 African countries to study how the Philippines successfully moved from non-investment grade to investment grade.

According to him, one of the major weaknesses affecting many African countries is the inability to provide credible, timely and transparent data, leaving room for subjective assessments by rating agencies.

Gilpin expressed confidence that Nigeria’s ongoing reforms, coupled with recent improvements in its sovereign ratings, have placed the country on the path towards attaining investment-grade status, which would significantly enhance investor confidence and lower borrowing costs.

Also speaking, the Canadian High Commissioner to Nigeria, Mr. Pasquale Salvaggio, reaffirmed Canada’s commitment to strengthening economic ties with Nigeria.

He disclosed that Canada’s non-oil trade with Nigeria has grown by 50 per cent, making Nigeria Canada’s second-largest trading partner in Africa.

He added that Canada would also work with Nigerians in the diaspora to increase investments in the country’s economy.

The debriefing meeting focused on identifying practical measures to improve Nigeria’s engagement with international credit rating agencies, strengthen institutional capacity and ensure that the country’s sovereign ratings more accurately reflect the progress of its economic reforms and long-term growth prospects.

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