S&P Upgrades Nigeria’s Outlook to Positive, Affirms ‘B-/B’ Rating on Sustained Reform Progress

S&P Global Ratings has revised Nigeria’s sovereign credit outlook to “Positive” from “Stable” while affirming its long- and short-term foreign and local-currency ratings at “B–/B,” citing sustained progress from the country’s ongoing economic and structural reform agenda.

According to S&P, the improved outlook reflects expectations that Nigeria’s policy reforms, including fiscal consolidation, removal of fuel subsidies, liberalisation of the FX market, stronger revenue mobilisation, and the commissioning of the Dangote Refinery, will support medium-term macroeconomic stability and improve key fiscal, external, and monetary indicators.

Reform Traction and Growth Outlook

The rating agency highlighted that broad-based structural indicators have begun to strengthen since the reform programme was introduced in mid-2023 under President Bola Tinubu’s administration. S&P now projects average real GDP growth of 3.7% between 2025 and 2028, up from its earlier estimate of 3.2%, supported by improved oil production and rising private-sector confidence. Inflation is expected to ease gradually, reaching around 13% by 2028, although it will remain above 20% in the near term.

External Buffers and Fiscal Positioning

Nigeria’s external position is strengthening, aided by a stronger current account outlook and increased foreign exchange (FX) reserve accumulation, estimated at just under US$44bn as of October 2025. S&P anticipates further fiscal improvement driven by new tax administration reforms set to take effect before early 2026, aimed at improving compliance, revenue efficiency, and rationalising incentives. The general government deficit is forecast to average 3.2% of GDP over 2025-2028, while debt-service pressures, though still high, are expected to ease gradually.

FX Market Stability and Investor Confidence

S&P noted improved confidence in the willing-buyer, willing-seller FX framework, which has narrowed the gap between official and parallel market rates, thereby attracting diaspora remittances. However, the rating agency flagged risks associated with the rising share of foreign holdings in local-currency debt, warning that portfolio flows may remain sensitive to external shocks.

Risks Remain

Despite improvements, S&P identified persistent structural vulnerabilities, including a low GDP per capita (estimated at US$1,200), high poverty and inflation rates, weak fiscal revenue generation, and gaps in data transparency. Implementation risks tied to public sentiment and possible policy slowdown ahead of the 2027 elections also remain key watch points.