Fitch Ratings has shifted Nigeria’s credit outlook to Positive, maintaining the ‘B’ rating and indicating potential for an upgrade if key economic metrics continue to improve. The decision reflects a complex mix of strengthening external finances and persistent fiscal challenges.

Introduction

Fitch Ratings has shifted Nigeria’s credit outlook to Positive, maintaining the ‘B’ rating and indicating potential for an upgrade if key economic metrics continue to improve. The decision reflects a complex mix of strengthening external finances and persistent fiscal challenges.

What Happened

On Friday, October 9, 2026, Fitch Ratings revised Nigeria’s credit outlook from Stable to Positive, affirming the long-term issuer default rating at ‘B’. The action follows notable improvements in the country’s external position, including a rise in gross foreign exchange reserves to $54.9 billion by September 2026, up from $32 billion in mid-2024. The agency also noted higher crude oil production, the ramp-up of the Dangote Petroleum Refinery, and a projected current account surplus of 6.4% of GDP in 2026.

Why This Matters

The outlook change signals that Nigeria’s economic reforms are beginning to bear fruit, particularly in reserve accumulation and foreign exchange market stability. However, Fitch cautioned that high debt-servicing costs, elevated inflation, and ongoing security risks could limit the sustainability of the positive trajectory. The agency highlighted that the federal government’s interest-to-revenue ratio remains above 50%, a level that poses significant fiscal pressure. Investor sentiment will likely depend on how these dynamics unfold.

Key Takeaways

  • GDP growth is forecast at 4.3% in 2026, up from 4% in 2025, with expectations of staying above 4% through 2028.
  • Inflation is expected to moderate to 15.4% in 2026, though it remains above the 5.6% median for ‘B’-rated countries.
  • Net foreign exchange reserves rose to $46 billion, a significant improvement from $34.8 billion at the end of 2025, though still well below crisis-era highs.
  • Fitch warned that continued reliance on Total Return Swaps and repurchase agreements introduces transparency and liquidity risks, especially after a proposed $5 billion facility with First Abu Dhabi Bank.
  • Sustained reforms, lower inflation, and stronger reserves could support a future rating upgrade, while weaker policy credibility or renewed FX pressures could trigger a negative outlook shift.

Conclusion

Fitch’s decision to place Nigeria’s outlook on Positive footing underscores the impact of improved reserves and reform momentum, but significant fiscal and external risks remain. Stakeholders should monitor policy implementation, particularly around tax reforms and debt management, as these will determine whether the ‘B’ rating can be upgraded in the near term.