International Trade AnalysisMacroeconomic updateNigeria & South Africa

13 June 2022

Nigeria & South Africa Foreign Trade: Different Courses, for Different Horses

In brief

  • Once again, Nigeria faces backlash from the international investing community because of its economic quandary.
  • Aging infrastructure and lingering policy uncertainty continue to weigh on the performance of the country’s oil sector – the crux of Nigeria’s economic weaknesses.
  • Unfortunately, this will rain on Nigeria’s parade – given its large development spending needs -, as many of its sustainable financing channels are showing little-to-no prospects in the near term.
  • As a result, Nigeria’s balance of risks in the near term is skewed to the downside, portending dire implications for its fiscal profile, external sector health, and the wider economy.
  • This, however, does not mean that Nigeria is completely hogwash.
  • While the international investing community remains cautious around investing in Nigeria’s debt securities, we believe that the risk of default in the near term is still low.
  • However, the country’s capacity to continue its borrowing spree has been impaired by increased government outgo in the future, and foreign investors will be demanding more premium to hold Nigeria’s debt securities – especially Eurobonds.

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