International credit rating agency Fitch Ratings has revised Nigeria’s economic outlook from stable to positive while affirming the country’s long-term credit rating at ‘B’, citing improving foreign exchange reserves, ongoing economic reforms and expectations of stronger economic growth.
The rating action, announced on October 9, 2026, signals improved confidence in Nigeria’s economic policy direction and the possibility of a future rating upgrade if the current reform momentum is sustained.
The Federal Government disclosed the development in a statement issued by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, on Saturday, October 10.
According to the government, Fitch’s decision reflects progress in the management of the economy, improvements in external reserves and the potential for continued gains from reforms introduced by President Bola Tinubu’s administration.
A positive outlook does not constitute an immediate credit rating upgrade. Rather, it indicates that the agency could raise its assessment in the future if economic and fiscal conditions develop in line with its expectations.
The affirmation of Nigeria’s ‘B’ rating, however, indicates that the country’s creditworthiness remains within the speculative-grade category, meaning investors continue to face elevated risks compared with investment-grade sovereign borrowers.
Foreign reserves climb to $54.9bn
A major factor underpinning the revised outlook is the improvement in Nigeria’s external reserves, which rose to $54.9 billion as of September 25, 2026, from $32 billion in mid-April 2024.
The Federal Government attributed the increase to stronger portfolio investment inflows, higher export receipts, improved remittance inflows and the formalisation of foreign exchange transactions.
The accumulation of reserves provides the Central Bank of Nigeria with a stronger external buffer to meet foreign currency obligations, manage periods of market pressure and support confidence in the country’s external position.
Fitch also projected that Nigeria would record a current account surplus equivalent to 6.4 per cent of gross domestic product in 2026.
A current account surplus occurs when a country’s receipts from exports, income and transfers exceed its corresponding payments abroad. Such a position can help strengthen external resilience, although its durability depends on export performance, imports, capital flows and other economic developments.
The rating agency noted that improvements in the quality of Nigeria’s reserves had strengthened the country’s capacity to withstand external shocks.
The reserve accumulation and projected current account surplus are particularly significant for an economy that has faced foreign exchange shortages, exchange-rate pressures and difficulties attracting sufficient foreign currency inflows in previous years.
Fitch projects 4.3% economic growth
Fitch expects Nigeria’s real gross domestic product (GDP) to expand by 4.3 per cent in 2026, compared with four per cent in 2025.
The agency also projected that economic growth would remain above four per cent in 2027 and 2028, with non-oil activities expected to play a major role in sustaining the expansion.
The forecast suggests that sectors outside the traditional oil industry could continue to support economic activity as Nigeria pursues efforts to diversify its sources of growth and government revenue.
Non-oil sectors, including services, trade, agriculture and manufacturing, are important to the country’s long-term economic prospects because they can broaden employment opportunities and reduce dependence on fluctuations in crude oil prices.
However, sustained growth will also depend on improvements in productivity, infrastructure, access to finance and the ability of businesses to manage operating costs.
Fitch’s projections provide a more favourable assessment of Nigeria’s growth prospects, but the extent to which that growth improves household welfare will depend on job creation, real incomes and the distribution of economic gains.
Inflation expected to moderate
The rating agency also forecast average inflation of 15.4 per cent in 2026, less than half the level recorded in 2024.
The projected moderation would represent a significant improvement in the inflation outlook, although price pressures would remain an important concern for households and businesses.
Nigeria’s recent economic reforms, including the removal of the petrol subsidy and changes to the foreign exchange market, have coincided with higher costs for transportation, food, production and other essential goods and services.
While easing inflation could gradually reduce the pace at which living costs increase, it would not necessarily reverse previous price rises or restore the purchasing power households have lost.
The government has maintained that its reform programme is intended to correct economic distortions and establish more sustainable conditions for long-term growth.
Fitch’s forecast indicates an expectation that inflation will ease, but the pace of improvement will remain dependent on monetary conditions, food supply, exchange-rate movements and other domestic and external factors.
Tax reforms expected to strengthen government revenue
On the fiscal front, Fitch expects Nigeria’s tax reforms to support growth in non-oil revenue, an important consideration given the country’s historically low revenue collection relative to the size of its economy.
The agency projected that general government debt would average 32 per cent of GDP between 2026 and 2028, significantly below the median of 56 per cent for countries in the ‘B’ rating category.
The comparison suggests that Nigeria’s debt stock, relative to the size of its economy, is lower than that of many sovereigns in the same credit rating category.
However, the government’s capacity to service debt also depends on the amount of revenue it generates, the cost of borrowing, the structure of its debt and its refinancing requirements.
Fitch identified low government revenue and the high proportion of revenue allocated to debt servicing as continuing constraints on Nigeria’s fiscal position.
These challenges mean that a relatively low debt-to-GDP ratio does not automatically translate into low fiscal pressure, particularly when revenue collection remains limited.
The Federal Government said the reforms were designed to address these structural weaknesses by broadening the tax base, improving spending efficiency and strengthening public financial management.
Bank recapitalisation and domestic debt market recognised
Fitch also acknowledged the role of Nigeria’s domestic debt market and the ongoing bank recapitalisation exercise in the country’s financial system.
The agency noted that many Nigerian banks had capital adequacy ratios above 20 per cent, indicating that a number of institutions had substantial capital buffers relative to their risk-weighted assets.
The recapitalisation programme is intended to strengthen the capacity of banks to support larger transactions, expand lending and withstand potential financial shocks.
A stronger banking system could help channel savings into productive investment and improve the availability of credit to businesses, although lending growth will also depend on funding costs, credit risks and economic conditions.
Nigeria’s domestic debt market is similarly important because it provides a source of financing for the government and offers investors instruments through which to invest in local-currency securities.
Nevertheless, sustained improvements in the financial sector will require effective risk management, strong supervision and the preservation of confidence in the banking system.
FG says positive outlook validates Tinubu’s reforms
Reacting to the announcement, the Federal Government described Fitch’s decision as recognition of the economic reforms implemented under President Bola Tinubu.
The administration highlighted the removal of the petrol subsidy, the unification of the foreign exchange market and tax reforms as key measures intended to improve the functioning of the economy.
“Fitch’s Positive Outlook further validates the difficult but necessary reforms implemented under the leadership of President Bola Ahmed Tinubu, GCFR, from removing a costly and inequitable fuel subsidy to unifying the exchange rate and the landmark tax reforms,” the statement said.
The government said its medium-term objective was to move Nigeria towards investment-grade credit status, a classification associated with lower perceived credit risk than speculative-grade ratings.
“Our medium-term ambition is to place Nigeria firmly on the path to investment grade. We are committed to this work, not for the rating itself, but because these reforms will lower Nigeria’s cost of capital, crowd in private investment and create decent jobs at scale,” it said.
An investment-grade rating could potentially broaden the pool of institutional investors able to hold Nigerian sovereign debt and improve borrowing conditions over time. However, any reduction in financing costs would depend on sustained improvements in creditworthiness, market conditions and investor demand.
Inflation, weak revenue and debt servicing remain concerns
Despite welcoming the revised outlook, the government acknowledged that significant structural challenges remain.
The Finance Ministry identified persistent inflation, low government revenue relative to GDP and the high share of revenue devoted to debt servicing among the concerns highlighted by Fitch.
“These are the constraints the Government’s reform programme is designed to address,” the statement added.
The challenges illustrate the gap between improvements in selected macroeconomic indicators and the broader task of strengthening public finances and living standards.
Although higher reserves can improve external resilience and stronger growth can expand economic activity, the government will need to translate those gains into more reliable revenue, productive investment and improved public services.
The pressure on debt servicing is particularly important because it limits the resources available for infrastructure, healthcare, education and other public priorities.
Similarly, easing inflation would need to be accompanied by improvements in household purchasing power and employment opportunities for the benefits of economic stabilisation to become more visible to Nigerians.
Government pledges continued reforms
The Federal Government reaffirmed its commitment to maintaining a market-reflective foreign exchange regime, implementing the new tax laws, improving public spending efficiency and strengthening debt management.
It also pledged to support non-oil growth and economic diversification as part of efforts to broaden the country’s revenue base and reduce vulnerability to oil-market volatility.
According to the statement, the administration intends to focus on translating macroeconomic stability into tangible improvements in living standards through food security, job creation, human development and support for small businesses.
These priorities will be central to determining whether the improved assessment of Nigeria’s economic outlook is accompanied by sustained gains in employment, productivity and household welfare.
The government’s challenge will be to maintain policy consistency while addressing the cost-of-living pressures and business constraints associated with the ongoing economic adjustment.
S&P and Moody’s also take positive rating actions
The government noted that all three major international credit rating agencies had taken positive rating actions on Nigeria in 2026.
S&P Global Ratings upgraded Nigeria’s credit rating from ‘B-’ to ‘B’ in May, while Moody’s Ratings revised its outlook on the country to positive in August.
Fitch’s latest decision adds to the more favourable assessments from the three agencies, although each rating agency applies its own methodology and evaluates sovereign credit risks independently.
The developments could help strengthen Nigeria’s standing among international investors, particularly if the country sustains reserve accumulation, improves revenue mobilisation and maintains a credible policy framework.
For the Federal Government, the longer-term objective will be to convert the improved assessments into lower financing costs, stronger private investment and more resilient economic growth.
While Fitch’s positive outlook marks a shift in its assessment of Nigeria’s prospects, a future upgrade will depend on continued progress in addressing inflation, fiscal constraints, external vulnerabilities and other risks facing the economy.