Fitch Ratings has revised Nigeria’s credit outlook from stable to positive, citing stronger foreign exchange reserves, ongoing economic reforms and moderating inflation.
The agency affirmed Nigeria’s long-term issuer default rating at ‘B’ on October 9, 2026, signalling that a future upgrade is possible if the country sustains improvements in its economic and fiscal conditions.
Nigeria’s gross foreign exchange reserves reached $54.9 billion as of September 25, 2026, up from $32 billion in mid-April 2024. The increase reflects stronger portfolio investment inflows, export earnings, remittances and greater formalisation of foreign exchange transactions.
A positive outlook does not mean Nigeria’s credit rating has already been upgraded. Rather, it indicates that the agency sees potential for improvement if current trends continue.
Foreign Reserves Strengthen External Position
Fitch projects Nigeria’s current account surplus will reach 6.4 per cent of gross domestic product (GDP) in 2026, reflecting an improvement in the country’s external financial position.
The agency said greater flexibility in the naira exchange rate and improvements in monetary policy had helped strengthen economic resilience and support the accumulation of reserves.
Higher domestic refining capacity is also expected to reduce imports of refined petroleum products and ease demand for foreign exchange.
Crude oil production has met Nigeria’s OPEC target of 1.5 million barrels per day since May 2026, providing additional support for export earnings.
However, sustaining these improvements will depend on oil production, foreign investment flows and continued stability in the foreign exchange market.
Inflation Expected to Moderate
Fitch forecasts that Nigeria’s real GDP will grow by 4.3 per cent in 2026, compared with 4 per cent in 2025. It expects growth to remain above 4 per cent in 2027 and 2028, supported largely by non-oil activities.
Average inflation is projected at 15.4 per cent in 2026, less than half its 2024 level. Nevertheless, the agency noted that inflation remains elevated compared with similarly rated countries.
For households and businesses, the key concern is whether moderating inflation will translate into more affordable goods, improved purchasing power and lower operating costs.
Fiscal Challenges Remain
Despite the improved outlook, Nigeria continues to face constraints from low government revenue and high debt-servicing costs.
Fitch expects tax reforms to strengthen non-oil revenue collection, while general government debt is projected to average 32 per cent of GDP between 2026 and 2028. This is below the median of 56 per cent for countries in the ‘B’ rating category.
The agency also highlighted the depth of Nigeria’s domestic debt market and the banking sector’s recapitalisation programme, noting that many banks have capital adequacy ratios above 20 per cent.
However, increasing government revenue and managing expenditure efficiently will remain important to reducing fiscal pressure and sustaining investor confidence.
Other Rating Agencies Also Signal Improvement
The latest decision follows positive rating actions by other international agencies in 2026.
S&P Global Ratings upgraded Nigeria’s rating from ‘B-’ to ‘B’ in May, while Moody’s Ratings revised its outlook on the country to positive in August.
FTSE Russell also restored Nigeria to Frontier Market status, effective September 21, 2026.
These developments indicate improving assessments of Nigeria’s economic policy direction, although each institution uses its own methodology and criteria.
What the Positive Outlook Means for Nigeria
An improved credit outlook could support investor confidence and potentially reduce borrowing costs over time. It may also encourage private investment if businesses gain greater confidence in the country’s economic environment.
However, these benefits are not automatic. They will depend on sustained reforms, stronger non-oil revenue, continued reserve accumulation and effective management of public finances.
Fitch indicated that further improvements in inflation, external reserves and revenue mobilisation could support additional positive rating action.
For Nigeria, the next challenge is to translate stronger economic indicators into more affordable financing, greater investment, job creation and improved living standards.
