Fitch Raises Nigeria’s Credit Outlook to Positive
…Says Higher Rating Could Follow
By Patience Ikpeme
Global credit rating agency Fitch Ratings has improved its outlook on Nigeria to “Positive” from “Stable”, while keeping the country’s rating at ‘B’. The decision, announced on October 9, 2026, means Fitch could raise Nigeria’s rating in the future if the current progress continues.
In simple terms, a credit rating is like a report card on how safe it is to lend money to a country. A better rating usually means lower borrowing costs and more confidence from investors. Fitch said its decision reflects ongoing reform of Nigeria’s economic policies and its stronger belief that the reforms will continue.
The move means all three major international rating agencies have now taken positive steps on Nigeria this year. S&P Global Ratings raised Nigeria’s rating to ‘B’ from ‘B-‘ in May, and Moody’s Ratings changed its outlook to Positive in August. FTSE Russell, which compiles widely followed market indices, also returned Nigeria to “Frontier Market” status from September 21, 2026. The Federal Government said these decisions together show “a converging and increasingly favourable assessment” of the country’s reform path.
One of the biggest reasons for Fitch’s decision is the growth in Nigeria’s foreign exchange reserves, the dollars and other foreign currencies the country keeps to pay for imports and to protect the naira. Gross reserves stood at $54.9 billion on September 25, 2026, compared with $32 billion in mid-April 2024.
Fitch said the increase came from more foreign exchange deals being carried out through formal channels, strong inflows from foreign investors, and higher earnings from exports and money sent home by Nigerians abroad. The agency said better-quality reserves make Nigeria more able to withstand shocks from outside the country. It also expects Nigeria to record a current account surplus of 6.4 per cent of GDP in 2026. This means the country is expected to earn more from the rest of the world than it spends.
The rating agency pointed to greater flexibility in the value of the naira, falling inflation and faster-than-expected growth in reserves as signs that reforms are working. The Federal Government gave the credit to President Bola Ahmed Tinubu. The statement, signed by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, described the steps taken as “difficult but necessary reforms”. These include the removal of the fuel subsidy, the unification of exchange rates and what it called landmark tax reforms.
Fitch expects the economy to grow by 4.3 per cent in 2026, up from 4 per cent in 2025. It expects growth to stay above 4 per cent in 2027 and 2028, led mainly by activity outside the oil sector.
Inflation, the rate at which prices rise, is also expected to ease. Fitch forecasts average inflation of 15.4 per cent in 2026, which is less than half the level recorded in 2024.
Fitch expects Nigeria’s general government debt to average 32 per cent of GDP between 2026 and 2028. That is well below the 56 per cent median for countries with the same ‘B’ rating. Put simply, Nigeria owes less compared with the size of its economy than most countries in its rating group.
Crude oil production has met Nigeria’s OPEC target of 1.5 million barrels per day since May 2026. Fitch also noted that the growth of local refining is reducing the amount of petrol and other refined products the country imports, which in turn lowers demand for foreign exchange.
Fitch took note of the bank recapitalisation exercise, in which banks were required to raise more capital. Many banks now have capital adequacy ratios above 20 per cent, well above the minimum set by regulators. This ratio measures how well a bank can absorb losses. The agency also recognised the strength of Nigeria’s domestic debt market, which it described as liquid.
The Federal Government said its medium-term aim is to place Nigeria “firmly on the path to investment grade”. Investment grade is the rating level that marks a country as a safe place for large, long-term investors. The Minister said the reforms are being carried out “not for the rating itself”, but to lower the cost of borrowing for Nigeria, attract more private investment and create decent jobs on a large scale.
The Government also admitted the areas where Fitch sees room for improvement. Inflation, although falling, “remains above that of peer countries”. Government revenue is still low compared with the size of the economy, and interest payments take up a large share of that revenue. The Government said its reform programme is designed to deal with these problems. Fitch expects the new tax reforms to raise the share of non-oil revenue in the economy.
Fitch said Nigeria could receive a higher rating if inflation keeps falling and reforms are carried out fully, if reserves grow further, and if the Government collects more revenue from sources outside oil. The Ministry said all three remain central to the administration’s economic strategy.
The Federal Government said it will keep a market-based and transparent foreign exchange system, fully implement the new tax laws and improve tax collection. It also plans to improve spending efficiency, budget execution and debt management, and to pursue reforms that support growth outside oil and a more diverse economy. The Government said it wants to turn economic stability into “shared prosperity” through food security, decent jobs, human development and support for small businesses.
