S&P raises Nigeria’s credit rating on stronger economy

*Cites FX reforms, rising oil output, stronger reserves, Dangote Refinery impact

*Warns inflation, poverty remain major risks ahead of 2027 polls

By Babajide Komolafe

Nigeria today secured a major boost in global investor confidence as S&P Global Ratings upgraded the country’s sovereign credit rating to ‘B’ from ‘B-’, citing improvements in macroeconomic stability, foreign exchange reforms and stronger oil sector performance.

The global rating agency also retained a stable outlook for the country, indicating confidence in the sustainability of ongoing economic reforms by the Federal Government.

In its latest rating action released yesterday, S&P said the upgrade reflected Nigeria’s improved external position, rising foreign exchange reserves, higher oil production and stronger fiscal revenue generation.

The agency specifically highlighted the impact of the 2023 exchange rate liberalisation policy and increased domestic refining capacity led by the Dangote Industries Limited refinery.

According to S&P: “Following three years of sustained structural reforms, Nigeria’s creditworthiness has improved. Most notably, the liberalisation of the exchange rate has bolstered access to foreign currency and enabled a market-driven exchange-rate environment.”

The agency stated that reforms in the oil and fiscal sectors were gradually strengthening government finances and reducing debt pressure.

It projected that Nigeria’s debt-to-revenue ratio would decline to 338 per cent in 2026 from nearly 500 per cent in 2023 due to improved tax revenue and increased remittances from oil earnings.

S&P also noted that Nigeria’s current account surplus would improve to 5.8 per cent of Gross Domestic Product, GDP, in 2026 from 4.8 per cent in 2025, supported by higher crude oil prices and growing refined petroleum exports.

The agency disclosed that Nigeria’s oil production had risen significantly due to improved security in the Niger Delta and reduced crude oil theft.

According to the report, oil production increased to about 1.65 million barrels per day in 2025 from 1.38 million barrels per day in 2022.

S&P further noted that the Dangote refinery, currently operating near its installed capacity of 650,000 barrels per day, would continue to support economic growth, foreign exchange earnings and domestic fuel supply.

Despite the positive outlook, the rating agency warned that inflationary pressure, rising fuel prices and poverty remain major risks to the economy.

It stated that the removal of fuel subsidy and rising global crude oil prices had continued to push up petrol and diesel prices across the country, worsening cost of living pressures.

The agency projected inflation at 17.7 per cent in 2026, though it expressed optimism that inflation would moderate to below 10 per cent by 2028 if current reforms are sustained.

S&P also warned that Nigeria’s weak revenue base, high unemployment and rising poverty levels could undermine reform momentum, especially as the country approaches the 2027 general elections.

Nevertheless, the agency expressed confidence that continued reforms, improved fiscal discipline and exchange rate flexibility would strengthen Nigeria’s economic resilience and support stronger long-term growth.

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