S&P Global Ratings has lifted Nigeria’s sovereign credit outlook to positive from stable, a move that signals growing confidence in the country’s reform drive and improving macroeconomic signals.
The agency kept Nigeria’s long- and short-term foreign and local currency ratings at ‘B-/B’, along with national scale ratings of ‘ngBBB+/ngA-2’, but noted that the country is now on firmer ground than it was a year ago.
In August 2023, S&P shifted Nigeria’s outlook from negative to stable, following earlier concerns tied to the country’s weak revenue base and limited FX liquidity. The negative outlook in May 2023 stemmed from rising fiscal deficits and declining foreign exchange inflows. The Central Bank of Nigeria later reported that the fiscal deficit for the first quarter of 2023 stood at N4 trillion.
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According to S&P, the new outlook is driven by stronger external accounts, rising investor confidence, and clearer fiscal and monetary policy coordination. The agency acknowledged that the state of the economy remains fragile, with low GDP per capita, heavy debt servicing, and gaps in data quality, yet concluded that Nigeria has begun to chart a more stable path under President Bola Tinubu’s reform agenda.
Since mid-2023, a wave of policy changes has reshaped Nigeria’s macroeconomic landscape. Currency liberalization, fuel subsidy removal, renewed efforts to grow revenue, and the gradual rebound of oil output have earned global attention. The commissioning of the Dangote refinery has added a new dynamic, with expectations that it will reduce import dependence and improve the balance of payments once production volumes reach maximum.
S&P added that authorities have taken steps aimed at lifting growth and strengthening the economy’s resilience. These moves, the agency argued, are beginning to yield tangible results.
Growth projections rise as policies settle in
S&P has upgraded Nigeria’s growth forecast to an average of 3.7% from 2025 to 2028, up from its previous projection of 3.2%. Higher oil output, improved refinery activity, and rising private sector confidence are feeding into that outlook. Inflation is projected to slow steadily, reaching about 13% by 2028, helped by tighter monetary policy and a more predictable FX framework.
Foreign reserves are quoted at just under $44 billion as of October 2025, and the country’s exit from the FATF grey list has encouraged inflows from Nigerians abroad and foreign portfolio investors. The naira’s current trading framework, though still volatile, has helped restore some clarity to the FX market.
S&P, however, warned that any slippage in implementing reforms or any weakness in Nigeria’s ability to pay commercial obligations could send the outlook back to stable. Rising fiscal pressures, heavy debt service needs, or sudden shifts in foreign investor sentiment remain real possibilities. On the other hand, a rating upgrade could arrive within a year if fiscal and external gains continue to strengthen.
Nigeria’s public finances are expected to benefit from the newly enacted Nigeria Revenue Service Establishment Act and the Tax Administration Acts. These laws streamline collection processes and aim to reduce leakages.
S&P projects a general government deficit averaging 3.2% of GDP over 2025–2028. The 2027 election cycle is not expected to derail fiscal discipline significantly. Debt servicing costs will remain heavy, though more orderly liquidity management and tighter spending controls may ease some of the strain.
For the first time in years, oil production has gained some stability, rising to 1.60 million barrels per day from 1.38 mbpd in 2022. Strengthened security efforts have reduced theft and vandalism along key pipelines. The Dangote refinery has begun operations and is expected to scale toward its full 650-million-barrel annual capacity.
These gains, along with new GDP rebasing, point to a more diversified and sturdier economic structure. S&P acknowledged that non-oil sectors are expanding, although challenges remain.
Structural weaknesses keep pressure high
Nigeria continues to struggle with low income levels — GDP per capita remains around $1,200 — and high poverty. Inflation at 16.05% as of October is trending down, and is expected to drop further if the food import window opened earlier this year remains in place. The informal sector, while complicating tax collection, plays a key role in absorbing shocks during economic downturns.
S&P noted that issues tied to weak data quality, financial leakages, and limited institutional capacity will take time to correct. The agency expects the current administration to keep pushing reforms, though momentum may ease as political attention shifts toward the 2027 elections.
The agency summed up its outlook with a cautiously upbeat tone: improved confidence, more oil on the market, and stronger policy coordination could carry growth to an average of 3.7% in the 2025–2028 period.
Wale Edun, Minister of Finance and Coordinating Minister of the Economy, welcomed the revision and promised to implement policies that will sustain the momentum.
“We will continue to implement well-coordinated policies that restore macroeconomic stability, attract investment, and create opportunities for our citizens. The confidence shown by global ratings agencies strengthens our resolve to deliver a stronger, more dynamic, and more prosperous Nigerian economy,” he said.
The latest revision now marks the most encouraging signal from S&P since before Nigeria’s two recessions in the last decade. It shows growing belief that the country’s reforms — long avoided — are beginning to deliver early macroeconomic gains that global markets can measure.