S&P Global Upgrades Nigeria’s Credit Rating, Signals Stronger Naira Outlook

Improved Macroeconomic Outlook Drives Nigeria’s Credit Rating Upgrade

S&P Global Ratings has upgraded Nigeria’s sovereign credit rating from “B-” to “B” with a stable outlook, marking the country’s first ratings upgrade by the agency in 14 years. The decision reflects improving macroeconomic conditions, foreign exchange reforms and stronger fiscal performance, according to the global ratings agency.

The upgrade follows similar positive rating actions by Fitch Ratings and Moody’s in 2025, reinforcing growing international confidence in Nigeria’s ongoing economic reform programme. Analysts say the development could improve investor sentiment, support capital inflows and strengthen the medium-term outlook for the naira

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S&P Cites FX Reforms and Stronger Reserves

According to S&P Global Ratings, Nigeria’s improved credit profile reflects the impact of structural reforms implemented since 2023, particularly the liberalisation of the foreign exchange market and the move toward a market-driven exchange rate system.

The agency stated that exchange rate reforms have improved access to foreign currency, boosted investor confidence and supported non-oil economic growth. S&P also highlighted improvements in external reserves, which reportedly increased to approximately $50 billion by March 2026 from around $33 billion in 2023.

Improved current account balances, lower import demand, fuel subsidy removal and expanding domestic refining capacity were identified as major contributors to the stronger reserve position. The agency specifically referenced the growing impact of the Dangote Petroleum Refinery on Nigeria’s external balance outlook.

Investor Confidence Expected to Improve

Market analysts believe the credit upgrade could strengthen Nigeria’s appeal to foreign portfolio investors and international lenders by reducing perceived sovereign risk. According to Nairametrics, stronger investor confidence may support increased inflows into Nigerian Treasury Bills, Open Market Operations (OMO) instruments and sovereign bonds, potentially improving liquidity in the foreign exchange market.

S&P also reported that average monthly foreign exchange turnover rose to approximately $8.6 billion in 2025, with April 2026 alone recording nearly $10 billion in FX market supply.

Analysts note that sovereign rating upgrades often reduce borrowing costs for governments and improve access to international capital markets for domestic companies seeking external financing.

Fiscal Reforms and Oil Sector Recovery Support Upgrade

The ratings agency credited ongoing fiscal reforms for improving Nigeria’s economic outlook. S&P highlighted measures aimed at increasing government revenue mobilisation, including reforms linked to petroleum revenue remittances and broader tax restructuring initiatives.

According to S&P projections, Nigeria’s debt-to-revenue ratio could decline to 338% in 2026 from nearly 500% in 2023 if reforms continue as planned. The agency also forecast stronger current account surpluses and improved oil sector performance over the medium term.

Oil production has reportedly risen due to improved security conditions and reduced crude theft, while domestic refining expansion is expected to reduce fuel import dependence and strengthen export earnings.

Challenges Remain Despite Positive Outlook

Despite the ratings improvement, S&P maintained that Nigeria still faces significant structural challenges, including inflation, poverty, unemployment and security pressures. The agency warned that reversing current reforms or adopting expansionary fiscal policies could negatively affect future ratings performance.

Analysts also caution that the upgrade does not immediately translate into improved living conditions for ordinary Nigerians, particularly as inflation and rising fuel costs continue to affect household purchasing power.

At the same time, economic observers argue that sustained policy consistency and macroeconomic stability remain critical to maintaining investor confidence and strengthening long-term growth prospects.

Outlook for Nigeria’s Economy and the Naira

The S&P upgrade signals improving international perception of Nigeria’s economic direction following years of foreign exchange shortages, fiscal pressures and ratings stagnation. Analysts expect the decision to support medium-term naira stability, particularly if foreign exchange liquidity continues to improve and fiscal reforms remain on track.

For policymakers, the challenge will involve balancing reform momentum with inflation control, debt sustainability and broader economic inclusion. For investors, the ratings upgrade may strengthen confidence in Nigeria’s evolving macroeconomic outlook and financial market stability.

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