• Oyedele says market conditions right for planned move
•US may slam additional 12.5% tariff on Nigerian exports
Emmanuel Addeh in Abuja
Nigeria is considering refinancing some of its expensive debt obligations and raising fresh funding to bridge its budget deficit, buoyed by improved investor confidence and elevated crude oil prices triggered by tensions in the Middle East.
Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, disclosed that the federal government was looking to take advantage of favourable market conditions to restructure costly legacy debt and secure additional financing for development projects.
Speaking in an interview with Bloomberg TV, Oyedele said the current environment presented a unique opportunity for Nigeria to improve its debt profile while mobilising resources to support economic growth.
“We think that this timing is good for us to be able to maybe even refinance some of our expensive past debts, but also to raise more funding for our development at this critical time. You don’t know what happens tomorrow. But as of today, market conditions are actually very good,” he pointed out.
The renewed optimism stems largely from the sharp rise in crude oil prices following the conflict involving Iran, which has boosted the fortunes of oil-producing countries outside the Middle East, including Nigeria.
Higher oil prices have strengthened Nigeria’s external earnings position and improved investor perception of the country’s creditworthiness. The premium demanded by investors to hold Nigerian dollar-denominated bonds over comparable United States Treasury securities has fallen significantly, reflecting growing confidence in the economy.
Despite improvements in government revenue, Oyedele noted that Nigeria still faces a budget deficit of about N30 trillion this year, necessitating the search for additional financing sources.
The minister explained that the government was keeping its financing options open, including access to concessional loans from multilateral institutions. “We’re keeping our options open, we know the size of the deficit, including less-costly concessionary loans,” he said.
According to him, discussions are ongoing with the World Bank and other development finance institutions, while reforms implemented by the Bola Tinubu administration have continued to attract investor interest.
The government has undertaken a number of reforms since assuming office in May 2023, including fuel subsidy removal, tax policy changes, foreign exchange reforms and efforts to improve fiscal revenues.
However, while rising oil prices have boosted government earnings, they have also contributed to inflationary pressures globally, complicating monetary policy decisions and increasing the cost of delivering critical infrastructure and social services.
The US-Israeli war on Iran has pushed the price of Brent crude up as much as 63 per cent this year, creating an opportunity for producers outside the Middle East like Nigeria, while the premium investors demand to hold Nigerian dollar bonds rather than US Treasuries has fallen 80 basis points since the start of the war to 262, the lowest in more than a decade.
Meanwhile, Nigeria may face fresh trade headwinds from the United States after the Office of the United States Trade Representative (USTR) proposed imposing an additional 12.5 per cent tariff on Nigerian exports over concerns relating to alleged forced labour regulations.
The proposal forms part of action targeting 60 economies under Section 301 of the US Trade Act of 1974, following investigations into what Washington described as inadequate measures by several trading partners to combat forced labour in international supply chains.
In a statement issued by the USTR, Nigeria was listed among 54 economies found to have “failed to impose and effectively enforce a prohibition on the importation of goods produced with forced labour.” As a result, the agency proposed additional duties on products originating from the affected countries.
The agency explained that countries with existing forced labour import prohibitions or those that have committed to implementing such measures through trade agreements would face a lower tariff of 10 per cent.
However, countries categorised as having no effective prohibition regime, including Nigeria, could be subjected to a 12.5 per cent additional duty should the proposal be adopted.
U.S. Trade Representative, Ambassador Jamieson Greer, said the failure of major trading partners to adequately address the importation of goods produced with forced labour created unfair competition for American workers and businesses.
“The failure of our most important trading partners to address the importation of goods made with forced labour is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field,” Greer said.
He added that while some countries had taken initial steps to curb the importation of forced labour goods, much more needed to be done to eliminate the practice from global supply chains.
The USTR argued that the failure of the affected economies to establish and enforce effective forced labour import prohibitions undermines global efforts to eradicate forced labour, distorts market competition and disadvantages firms that comply with acceptable labour standards.
According to the agency, such practices burden U.S. commerce by exposing American producers to unfair competition and facilitating the circumvention of existing forced labour restrictions.
Aside from Nigeria, other impacted countries include: Algeria; Angola; Argentina; Australia; the Bahamas; Bahrain; Bangladesh; Brazil; Cambodia; Chile; China, People’s Republic of; Colombia; Costa Rica; Dominican Republic; Egypt; El Salvador; Guatemala; Guyana; Honduras; Hong Kong, China; India; Iraq; Israel; Japan; Jordan; Kazakhstan; Kuwait; Libya; Malaysia and Morocco.
Others include: New Zealand; Nicaragua; Norway; Oman; Peru; the Philippines; Qatar; Russia; Saudi Arabia; Singapore; South Africa; South Korea; Sri Lanka; Switzerland; Taiwan; Thailand; Trinidad and Tobago; Türkiye; United Arab Emirates; United Kingdom; Uruguay; Venezuela; and Vietnam.
Also included were: Canada; Ecuador, the European Union; Indonesia; Mexico; and Pakistan.