Nigeria’s economic prospects have received a boost, with S&P Global Ratings revising its outlook on the country to positive from stable. This move reflects the government’s efforts to implement reforms, which are expected to yield positive benefits over the medium term. The rating agency affirmed Nigeria’s ‘B-/B’ sovereign credit ratings, citing improving external, economic, fiscal, and monetary results.
The current administration, led by President Bola Tinubu, has maintained a concerted reform drive since mid-2023. Key initiatives include the liberalization of the exchange rate regime, significant fiscal consolidation measures, increased oil production, and the commissioning of the Dangote refinery. These efforts have placed external, fiscal, economic, and monetary indicators on a more positive trajectory.
S&P Global Ratings expects Nigeria’s real GDP growth to average 3.7% over 2025-2028, driven by the non-oil and oil sectors. The agency forecasts inflation to gradually decrease toward 13% in 2028. Improved confidence and oil production gains are expected to support growth, despite external uncertainty and lower oil prices.
The government’s focus on revenue mobilization is expected to moderately improve Nigeria’s fiscal position through 2028. The Tax Administration Act is anticipated to widen the tax net, increase compliance, and optimize subsidies. The general government deficit is forecast to average 3% of GDP over 2025-2028.
Nigeria’s external position has strengthened, with a current account surplus expected to persist over 2025-2028. The country’s gross external financing needs are anticipated to remain manageable, and usable reserves are expected to average $40 billion over the same period.
S&P Global Ratings may upgrade Nigeria’s ratings over the next 12 months if the country’s economic performance continues to exceed forecasts, alongside more entrenched fiscal and external gains. However, the rating agency may revise the outlook to stable if risks to Nigeria’s reform program implementation rise or if the country’s capacity to repay commercial obligations weakens.
Nigeria’s economic outlook has improved, driven by the government’s reform efforts. The country’s growth prospects are expected to remain positive over the medium term. The government must continue to implement reforms and address the country’s structural weaknesses to sustain economic growth and improve living standards.
