Fitch raises Nigeria’s outlook to positive and confirms ‘B’ rating.

Fitch Ratings has revised the outlook on Nigeria’s long-term issuer default ratings from stable to positive, while affirming the ‘B’ rating, the federal government has said.

In a statement signed by Finance Minister and Coordinating Minister for Economy, Taiwo Oyedele, on Saturday, the government said the October 9 decision signals that the rating could be increased if current trends are sustained.

Fitch attributed the naira’s increased flexibility, disinflation and faster-than-expected accumulation of foreign exchange reserves. Gross reserves stood at $54.9 billion as of September 25, up from $32 billion in mid-April 2024, supported by formalized currency transactions, strong portfolio inflows, and higher export earnings and remittances. The agency forecasts a current account surplus of 6.4% of GDP in 2026.

It expects real GDP growth of 4.3% this year, up from 4% in 2025, and expects growth to remain above 4% in 2027 and 2028, driven by non-oil activities. Fitch noted that crude oil production has met Nigeria’s OPEC target of 1.5 million barrels per day since May, while increased domestic refining is reducing product imports and demand for foreign currency. Average inflation is forecast at 15.4% in 2026, less than half the 2024 level.

Fitch expects tax reforms to increase the non-oil revenue-to-GDP ratio and expects overall government debt to average 32% of GDP over the 2026 to 2028 period, versus a ‘B’ median of 56%. He also cited domestic debt market liquidity and bank recapitalization, with many banks’ capital adequacy ratios above 20%.

Citing the removal of fuel subsidy, exchange rate unification and tax reforms, Oyedele said: “Fitch’s positive outlook further validates the difficult but necessary reforms implemented under the leadership of President Bola Ahmed Tinubu.

“Our medium-term ambition is to put Nigeria firmly on the path to investment grade.

“We are committed to this work, not because of the rating itself, but because these reforms will reduce Nigeria’s cost of capital, attract private investment and create decent jobs at scale,” he added.

The action means that all three major agencies have taken positive steps towards Nigeria this year. S&P downgraded the country to ‘B’ from ‘B-‘ in May, and Moody’s revised its outlook to positive in August.

FTSE Russell also upgraded Nigeria to frontier market status from 21 September.

The government has acknowledged Fitch’s concerns: inflation remains above comparable levels, revenues are low relative to the economy, and interest costs take up a high share of revenues.

“These are the constraints that the government’s reform program aims to address,” the statement said.

He listed his priorities as sustaining reform momentum with a market-reflective exchange rate regime, full implementation of new tax laws, spending efficiency and transparent debt management, structural reforms for non-oil growth, and support for jobs, food security and small businesses.

Fitch said an upgrade could follow sustained disinflation and reform implementation, stronger reserves and improved non-oil revenue mobilization.