Fitch Ratings has revised Nigeria's long-term issuer default ratings outlook to positive from stable, while affirming the rating at 'B'. This decision, made on October 9, signals that the rating could be raised if current trends are sustained. The revision is attributed to greater naira flexibility, disinflation, and faster-than-expected accumulation of foreign exchange reserves.
Nigeria's gross reserves stood at $54.9 billion on September 25, up from $32 billion in mid-April 2024. This increase is supported by formalised FX transactions, strong portfolio inflows, and higher export receipts and remittances. Fitch projects a current account surplus of 6.4 per cent of GDP in 2026. The agency also forecasts real GDP growth of 4.3 per cent this year, up from 4 per cent in 2025.
The growth is expected to stay above 4 per cent in 2027 and 2028, led by non-oil activity. Fitch noted that crude output has met Nigeria's OPEC target of 1.5 million barrels per day since May. The ramp-up of domestic refining is cutting product imports and FX demand. Average inflation is forecast at 15.4 per cent in 2026, less than half its 2024 level.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, attributed the positive outlook to difficult but necessary reforms implemented under President Bola Ahmed Tinubu's leadership. These reforms include the removal of the fuel subsidy, exchange rate unification, and tax reforms. Oyedele stated that the medium-term ambition is to place Nigeria firmly on the path to investment grade.
Fitch expects tax reforms to lift the non-oil revenue-to-GDP ratio and projects general government debt averaging 32 per cent of GDP over 2026 to 2028. This is against a 'B' median of 56 per cent. The agency also cited the liquid domestic debt market and bank recapitalisation, with many banks' capital adequacy ratios above 20 per cent.
The government acknowledged Fitch's concerns, including inflation remaining above peer levels, low revenue relative to the economy, and high interest costs absorbing a share of revenue. The government stated that its reform programme is designed to address these constraints. Priorities include sustaining reform momentum with a market-reflective FX regime and full implementation of new tax laws.
An upgrade could follow sustained disinflation and reform implementation, stronger reserves, and better non-oil revenue mobilisation. This positive step by Fitch follows similar actions by S&P and Moody's this year. FTSE Russell also returned Nigeria to Frontier Market status from September 21. The government remains committed to reforms that will lower Nigeria's cost of capital and create jobs.
Key points
- Fitch Ratings revises Nigeria's outlook to positive, affirming 'B' rating.
- Nigeria's gross reserves increase to $54.9 billion as of September 25.
- Fitch projects real GDP growth of 4.3 per cent in 2026.
