In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of the country, thus having a big impact on the country’s borrowing costs.
Bloomberg Business notes that “Africa’s largest economy, which derives 90 percent of export earnings and 70 percent of government revenue from oil, is struggling with Brent crude prices having halved since June. The International Monetary Fund predicted growth of 4.8 percent in 2015, down from 6.3 percent in 2014. The naira has weakened by about 18 percent, the most after Zambia’s kwacha among 24 African currencies tracked by Bloomberg”.
Nigeria’s credit rating could be upgraded after mid-term and long-term stability of politics in the country and stability in crude oil prices, the country’s main exportation mechanism.
A stable outlook for Nigeria’s credit rating in the next 12 months showed that review risks were balanced.
A successful implementation of Nigeria’s political program elements like the 2016 budget would probably contribute to enhancing its compressed dynamics for investment and growth.