S&P joins Fitch and Moody’s in upgrading Nigeria’s credit rating

Nigeria has secured a credit rating upgrade from S&P Global, the third major ratings agency in under a year to revise its assessment of the country upward, a milestone the government says vindicates two years of painful economic reforms under President Bola Tinubu.

S&P raised Nigeria’s long-term sovereign credit rating one notch on Friday, from B-minus to B, and revised its outlook from “positive” to “stable”. It signals that the agency sees the current trajectory as sustainable rather than merely aspirational.

The agency cited higher oil production and prices, a significant expansion in domestic refining capacity, and Nigeria’s landmark 2023 decision to liberalise its foreign exchange market as the primary drivers of improving creditworthiness. Together, S&P said, these factors are lifting economic growth and strengthening Nigeria’s balance of payments — the broadest measure of money flowing in and out of a country.

“We expect Nigeria’s real GDP per capita to rise 1.4% on average per year until 2029,” the agency said, calling that “a significant improvement on the 1% yearly contraction, on average, over the past decade.”

The upgrade completes a clean sweep. Fitch and Moody’s both raised Nigeria’s sovereign rating over the past year, citing improvements in the country’s external and fiscal positions. S&P’s action now means all three of the world’s preeminent credit rating agencies have independently moved in the same direction on Nigeria — a convergence that carries weight in international capital markets and can translate into lower borrowing costs and broader investor access.

The upgrade lands against an uncertain global backdrop. The U.S.-Israeli war with Iran has pushed up fuel costs and fed through to food prices across the region, nudging Nigeria’s headline inflation higher for the second consecutive month in April — interrupting eleven straight months of easing price pressures.

But S&P argued Nigeria is better insulated than most of its regional peers. As a sizeable net exporter of crude oil and an emerging producer of refined fuels — anchored by the long-awaited ramp-up of the Dangote refinery — Nigeria stands to benefit from elevated oil prices rather than be hurt by them.

The World Bank, in its April outlook, projected Nigeria’s economy would expand by around 4.2 percent in 2026. It urged authorities to save oil windfalls, hold monetary policy tight and resist the temptation to reintroduce broad subsidies — a prescription the Tinubu administration says it intends to follow.

The government’s response

Finance Minister Taiwo Oyedele framed the S&P action as external validation of a reform agenda that has required Nigerians to absorb significant short-term costs, from fuel price shocks to a sharply weakened naira, in exchange for the promise of longer-term stability.

“This latest upgrade by S&P follows similar positive rating actions in 2025 by Fitch Ratings and Moody’s Ratings,” Oyedele said in a statement. “It further reinforces growing international confidence in Nigeria’s economic reform trajectory, policy consistency, and medium-term growth prospects.”

The minister pointed to progress on Nigeria’s debt-to-revenue ratio — historically one of the most alarming features of the country’s fiscal picture — saying it had improved significantly since 2023 and was projected to continue declining.

He also used the moment to draw a clear line against any reversal on fuel subsidies, which successive Nigerian governments used for decades to keep pump prices artificially low, at enormous fiscal cost.

“We have maintained our position against the reintroduction of inefficient fuel subsidies which historically created significant fiscal distortions, incentivised smuggling, weakened foreign exchange liquidity, and diverted scarce public resources away from critical national priorities,” Oyedele said.

On the foreign exchange front, S&P gave specific credit to the sustained implementation of market liberalisation — the policy that, when announced in 2023, sent the naira into a steep fall but which has since contributed to rebuilding Nigeria’s external reserves and restoring confidence among foreign investors who had been locked out by the old fixed-rate regime.

Oyedele acknowledged that the work was far from finished. “We recognise that the work ahead remains substantial,” he said. “We are focused on addressing inflationary pressures, improving food security, expanding decent job opportunities, and ensuring that economic growth translates into meaningful and inclusive prosperity for all Nigerians.”