Fitch revises Nigeria’s credit outlook

Fitch Ratings has revised Nigeria’s credit outlook to Positive from Stable, citing stronger foreign exchange reserves, lower inflation and improvements in the country’s economic policy framework.

A Positive Outlook means a higher ranking awaits a country in the future if the economy continues to improve and the government continues its reforms.

However, the agency maintained Nigeria’s credit rating at ‘B’, meaning the agency has not upgraded the country.

The decision, announced on October 9, comes as Nigeria’s gross foreign exchange reserves increase to $55 billion by September 2026, from $32 billion in mid-April 2024.

The developments represent an increase of $22.9 billion, or about 71.6 percent, over the period, strengthening the country’s capacity to meet external obligations and withstand pressure on foreign exchange markets.

Minister of Finance and Coordinator of the Economy, Taiwo Oyedele, yesterday welcomed Fitch Ratings on behalf of the federal Government.

He called it an indication of growing confidence in the direction of Nigeria’s economic reforms.

Fitch attributed the improved outlook to greater naira exchange rate flexibility, lower inflation and faster-than-expected accumulation of foreign exchange reserves.

The agency also identified increased formalization of foreign exchange transactions, strong portfolio investment inflows, higher export earnings and remittances as factors supporting the growth of foreign exchange reserves.

It said that improving the quality of foreign exchange reserves had strengthened Nigeria’s ability to withstand external shocks, and projected a current account surplus of 6.4 percent of gross domestic product in 2026.

The current account measures the flow of money in and out of a country through trade in goods and services, investment income and transfers. A surplus indicates that the country earns more income from these transactions than it spends abroad.

Fitch’s assessment provides new support to the government’s argument that economic reforms are starting to improve Nigeria’s external position, although maintaining those gains will depend on sustained foreign exchange inflows, stronger production and sound economic management.

The agency expects the economy to grow faster this year, forecasting real gross domestic product growth of 4.3 percent in 2026, compared with four percent in 2025.

The report projects that growth will remain above four percent in 2027 and 2028, driven primarily by activities outside the oil sector.

The forecast shows that agriculture, manufacturing, trade, telecommunications and other non-oil activities are expected to play an increasingly important role in expanding the economy.

Fitch also estimates average inflation will fall to 15.4 percent in 2026, less than half the inflation rate in 2024.

The projected moderation in inflation is another factor supporting the improvement in the outlook.

However, the agency noted that inflation in Nigeria remains higher than in similar countries, leaving households and businesses impacted by rising living and operational costs.

In the oil sector, the agency noted that Nigeria has met the Organization of the Petroleum Exporting Countries (OPEC) production target of 1.5 million barrels per day since May 2026.

Higher crude oil production is important for the country as oil exports remain a major source of foreign exchange earnings and government revenue.

Expansion of domestic refining also helps reduce imports of refined oil products and the demand for foreign exchange needed to pay for those products.

With more petroleum products supplied locally, Nigeria could capture a greater share of foreign exchange previously spent on fuel imports, provided domestic refineries maintain production and meet market demand.

A combination of stronger oil production, domestic refining, increased exports and remittance inflows is expected to support the country’s external position, although the durability of this improvement will depend on global oil market developments and domestic production conditions.

Fitch’s decision follows other positive developments in Nigeria’s international credit assessments this year.

S&P Global Ratings upgraded Nigeria’s credit rating from ‘B-‘ to ‘B’ in May, while Moody’s Ratings revised the country’s outlook to Positive in August.

Nigeria also returns to Frontier Market status under the FTSE Russell classification, effective September 21, 2026.