S&P Raises Nigeria’s Outlook To Positive

S&P Global Ratings has upgraded Nigeria’s outlook to Positive and affirmed its long and short-term foreign and local currency ratings at B minus and B.

The agency said that the change reflects steady progress in the country’s economic and structural reforms.

S&P explained that the upgrade is linked to reforms introduced since mid-2023 under President Bola Tinubu. These include fiscal consolidation, the removal of fuel subsidies, the liberalisation of the foreign exchange market, stronger revenue mobilisation and the expected gains from the Dangote Refinery. The agency believes these steps will support stability and improve Nigeria’s fiscal and external performance over the medium term.

Growth Prospects Improve

S&P now expects the economy to expand by an average of 3.7 percent between 2025 and 2028, up from its earlier forecast of 3.2 percent. The agency said improved oil output and growing confidence among private-sector players are behind the upgraded outlook. It also projects a gradual slowdown in inflation, which could drop to around 13 percent by 2028, even though it is likely to remain above 20 percent in the near term.

Stronger External Buffers

Nigeria’s external position is also getting stronger. The current account outlook has improved and foreign exchange reserves reached just under 44 billion dollars in October 2025. S&P expects further fiscal gains as new tax administration reforms take effect before early 2026. The reforms aim to improve compliance and revenue efficiency and tighten the use of tax incentives. The government deficit is projected to average 3.2 percent of GDP between 2025 and 2028. Debt service costs remain high but may ease gradually over the period.

FX Market Shows More Stability

S&P noted rising confidence in the willing-buyer willing-seller FX framework. The system has narrowed the gap between official and parallel market rates and is attracting more diaspora remittances. The agency warned that the growing share of foreign investors in local-currency debt instruments could expose the market to sudden shifts if global financial conditions change.

Underlying Risks Remain

Despite the positive direction, S&P said that Nigeria still faces major structural issues. These include low-income levels, high poverty, persistent inflation, weak revenue generation and gaps in data transparency. The agency also highlighted the risk of a slowdown in policy execution as the 2027 elections approach.

S&P’s review signals stronger confidence in Nigeria’s economic direction. It also stresses the need for continued reform to sustain the progress made so far.