S&P Raises Nigeria’s Credit Rating as Economy Strengthens

*Cites FX reforms, rising oil output, stronger reserves, Dangote Refinery impact

*Warns inflation, poverty remain major risks ahead of 2027 polls

By Babajide Komolafe

Nigeria received a significant boost in global investor confidence today when S&P Global Ratings upgraded the country’s sovereign credit rating from ‘B‑’ to ‘B’, citing gains in macroeconomic stability, foreign‑exchange reforms and a stronger oil sector.

The rating agency also maintained a stable outlook, signalling confidence in the sustainability of the Federal Government’s ongoing economic reforms.

In its most recent rating action released yesterday, S&P said the upgrade reflected Nigeria’s improved external position, higher foreign‑exchange reserves, increased oil production and stronger fiscal revenue generation.

The agency highlighted the impact of the 2023 exchange‑rate liberalisation policy and the expansion of domestic refining capacity led by the Dangote Industries Limited refinery.

According to S&P: “Following three years of sustained structural reforms, Nigeria’s creditworthiness has improved. Most notably, the liberalisation of the exchange rate has bolstered access to foreign currency and enabled a market‑driven exchange‑rate environment.”

The agency noted that reforms in the oil and fiscal sectors were gradually strengthening government finances and easing debt pressure.

It projected that Nigeria’s debt‑to‑revenue ratio would fall to 338 % in 2026 from nearly 500 % in 2023, thanks to improved tax revenue and increased remittances from oil earnings.

S&P also indicated that Nigeria’s current‑account surplus would rise to 5.8 % of GDP in 2026 from 4.8 % in 2025, supported by higher crude‑oil prices and growing refined‑petroleum exports.

The agency disclosed that oil production had risen significantly due to improved security in the Niger Delta and reduced crude‑oil theft.

According to the report, oil production increased to about 1.65 million barrels per day in 2025 from 1.38 million barrels per day in 2022.

S&P further noted that the Dangote refinery, currently operating near its installed capacity of 650,000 barrels per day, would continue to support economic growth, foreign‑exchange earnings and domestic fuel supply.

Despite the positive outlook, the rating agency warned that inflationary pressure, rising fuel prices and poverty remain major risks to the economy.

It stated that the removal of the fuel subsidy and rising global crude‑oil prices had continued to push up petrol and diesel prices across the country, worsening cost‑of‑living pressures.

The agency projected inflation at 17.7 % in 2026, though it expressed optimism that inflation would moderate to below 10 % by 2028 if current reforms are sustained.

S&P also cautioned that Nigeria’s weak revenue base, high unemployment and rising poverty levels could undermine reform momentum, especially as the country approaches the 2027 general elections.

Nevertheless, the agency expressed confidence that continued reforms, improved fiscal discipline and exchange‑rate flexibility would strengthen Nigeria’s economic resilience and support stronger long‑term growth.

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