×

Fitch Rates Kaduna State’s Economy Stable

The global economy rating agency, Fitch, has rated Kaduna’s long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘B+’ and National Long-term rating at … Continue reading Fitch Rates Kaduna State’s Economy Stable


Fitch Ratings, First Bank, seven energy

Kaduna StateThe global economy rating agency, Fitch, has rated Kaduna’s long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘B+’ and National Long-term rating at ‘A+(nga)’, noting that the outlooks are stable.

The agency based its rating of the State on various indicators including efforts by the State Government to increase Internally Generated Revenue (IGR) as well as provision of capital to Small and Medium Enterprises especially in the Agriculture Value Chain sector.

Fitch said that the key rating drivers are based on the expectations that Kaduna State would continue to achieve a healthy financial performance amid mild growth in local taxes and subsidies from the Federal Government.

The ratings also take into account the likely increase in financial debt due to the high infrastructure investment programme, which could potentially pressurise the budget, and the weak socio-economic environment.

According to the agency, “Federal subsidies, including VAT accounts for about 80% of the state’s revenues and Fitch believes these will grow towards NGN80bn by 2016, from NGN60bn in 2013.

Yearly debt service requirements of about NGN5bn will continue to be comfortably covered by the current balance in the medium term by 2x, supported by Kaduna’s robust cash position of about NGN20bn, which administration officials plan to stabilise.”

The agency also identified effort by the State Government to support and develop its agricultural sector, through collaboration with the local banking system, to provide small scale farmers with N1 billion pooled funds.

However, the agency said unemployment remains the biggest challenge to the State’s economy, noting that unemployment rate increased despite continued growth in agriculture and industrial projects, including operations in the re-opened Peugeot automobile company and the oil refinery, employing approximately 1,000 workers each.