S&P Global Ratings has revised Nigeria’s sovereign credit outlook to positive from stable, citing sustained reform efforts and improving macroeconomic indicators.
The agency affirmed Nigeria’s long- and short-term foreign and local currency ratings at ‘B-/B’, alongside its national scale ratings of ‘ngBBB+/ngA-2’.
“The positive outlook reflects improving external, economic, fiscal, and monetary results,” S&P stated, acknowledging the country’s strides despite persistent challenges such as low GDP per capita, high debt servicing costs, and weak statistical infrastructure.
The upgrade follows a wave of reforms initiated since mid-2023 under President Bola Tinubu’s administration. These include exchange rate liberalization, fuel subsidy removal, enhanced revenue collection, and increased oil production, bolstered by the commissioning of the Dangote refinery.
S&P noted that these measures have placed Nigeria’s fiscal and monetary trajectory on a more stable path. “We think authorities are taking steps to improve the economy’s growth prospects and macroeconomic resilience,” the agency added.
Growth forecasts strengthen as reforms take hold
S&P has raised its growth expectations for Nigeria to an average of 3.7% between 2025 and 2028, up from a previous forecast of 3.2%, driven by higher oil output and rising private sector confidence. Inflation is projected to decline gradually, reaching 13% by 2028.
Nigeria’s external position has also improved, with gross foreign reserves estimated at under $44 billion as of October 2025. The country’s removal from the Financial Action Task Force grey list and a more stable naira exchange regime have helped attract diaspora remittances and foreign portfolio inflows.
However, S&P cautioned that risks remain. “We could revise the outlook to stable if risks to Nigeria’s reform program implementation rise or if capacity to repay commercial obligations weakens,” the agency warned.
Factors such as rising fiscal deficits, increased debt servicing needs, or capital outflows could undermine progress. Conversely, a ratings upgrade is possible within 12 months if fiscal and external gains become more entrenched and economic performance exceeds expectations.
Fiscal reforms and oil sector expansion drive optimism
S&P says Nigeria’s fiscal landscape is expected to benefit from ongoing reforms, including the Nigeria Revenue Service Establishment Act and Tax Administration Acts, which aim to clarify tax collection responsibilities and improve compliance.
S&P forecasts a general government deficit averaging 3.2% of GDP over 2025–2028, with election-related spending in 2027 not expected to cause significant fiscal deviation. Debt servicing costs remain high, but improved liquidity and controlled expenditure could ease pressure.
The report says the oil sector is also showing signs of recovery. Production has risen to 1.60 million barrels per day, up from 1.38 mbpd in 2022, thanks to efforts to curb militancy and theft. The Dangote refinery, now operational, is expected to ramp up output toward its 650 million barrel annual capacity, while rehabilitation of other refineries in Port Harcourt, Warri, and Kaduna will further boost refining capacity.
According to S&P, these developments, coupled with stronger non-oil growth and rebased GDP figures, suggest a more diversified and resilient economy.
Persistent challenges temper outlook
S&P says despite the positive trajectory, Nigeria continues to grapple with structural weaknesses. GDP per capita remains low at approximately $1,200, and poverty levels are high. Inflation, though easing, is expected to stay above 20% in 2025 and 2026, down from over 30% in 2024.
The informal economy, while complicating tax collection, provides resilience against shocks. S&P emphasized that “key weaknesses and vulnerabilities will only gradually reduce,” and data limitations continue to hinder comprehensive analysis.
Looking ahead, S&P expects President Tinubu’s administration to maintain its reform agenda, though momentum may slow as the 2027 elections approach. If Nigeria sustains its current trajectory, further upgrades could follow. “Improved confidence and oil production gains should support average growth of 3.7% over 2025–2028,” the agency concluded.
What you should know
In August 2023, S&P Global Ratings revised the outlook on Nigeria from negative to stable.
The rating agency had earlier maintained the country’s credit rating at B-/B but changed its outlook to negative in May that year, predicated on the country’s fiscal and debt position amidst the constrained revenue inflow and low FX supply.
Despite upward reviews of the nation’s economic outlook, the country’s fiscal deficit was N4.0tn in Q1 2023 as reported by the Central Bank of Nigeria (CBN) in its Quarterly statistical bulletin.
