Nigeria Wins Fresh S&P Credit Upgrade

S&P Global Ratings has upgraded Nigeria’s long-term foreign and local currency sovereign credit ratings to ‘B’ from ‘B-’, citing sustained structural reforms, improved foreign exchange liquidity, rising external reserves, and strengthening fiscal conditions under the administration of President Bola Tinubu.

The global ratings agency also affirmed Nigeria’s short-term sovereign ratings at ‘B’ while raising the country’s national scale ratings to ‘ngA+/ngA-1’ from ‘ngBBB+/ngA-2’. The outlook was maintained at stable.

The latest rating action marks a significant improvement in Nigeria’s sovereign credit profile and reflects growing international confidence in the country’s macroeconomic reform programme implemented over the last three years.

In its statement released on May 15, 2026, S&P said the rating upgrade was driven by reforms that have improved Nigeria’s external position, fiscal outlook, and monetary policy environment.

According to the agency, “Following three years of sustained structural reforms, Nigeria’s creditworthiness has improved.”

S&P stated that the liberalisation of Nigeria’s exchange rate system played a major role in improving investor confidence and enhancing access to foreign currency.

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“The liberalization of the exchange rate has bolstered access to foreign currency and enabled a market-driven exchange-rate environment, supporting investor and consumer confidence, while benefiting non-oil GDP growth,” the agency stated.

The rating agency said Nigeria’s foreign exchange market conditions have improved substantially since the commencement of reforms in 2023. It noted that average monthly foreign exchange turnover rose to approximately $8.6 billion in 2025, while April 2026 alone recorded about $10 billion in FX market supply.

Analysts say the increase in market liquidity reflects stronger investor participation and improved confidence in the naira following years of exchange-rate distortions, multiple FX windows, and foreign currency shortages that weakened economic activity.

S&P also highlighted the improvement in Nigeria’s external reserves as another major factor supporting the upgrade.

According to the agency, Nigeria’s gross external reserves increased to about $50 billion by March 2026 from roughly $33 billion in 2023.

The report attributed the reserve growth to stronger current account balances, lower import demand, expanding domestic refining capacity, and the fiscal effects of fuel subsidy removal.

The agency noted that the commencement of large-scale refining operations at the Dangote refinery has significantly altered Nigeria’s petroleum import structure and external liquidity outlook.

“Significant refining capacity is now also online; Dangote Industries Ltd.’s large-scale refinery and petrochemical complex has ramped up to near its maximum capacity of 650,000 barrels per day,” S&P stated.

The report said increased domestic refining capacity is expected to reduce Nigeria’s dependence on imported petroleum products, strengthen the balance of payments position, and improve foreign exchange stability over the medium term.

S&P projected that Nigeria’s current account surplus would improve to 5.8 per cent of GDP, supported by stronger oil earnings, reduced import pressure, and improved non-oil sector performance.

The agency also forecast oil production to average 1.66 million barrels per day in 2026, reflecting improved output conditions in the upstream petroleum sector following government efforts to tackle crude theft, pipeline vandalism, and operational disruptions.

On inflation, S&P projected that price pressures would gradually ease in the medium term, with inflation expected to decline from 23 per cent in 2025 to 17.7 per cent in 2026.

The ratings agency also forecast Nigeria’s real GDP growth at 3.7 per cent in 2026 after an estimated 4 per cent growth in 2025.

The latest sovereign upgrade follows S&P’s earlier decision in November 2025 to revise Nigeria’s outlook to positive from stable while affirming the country’s sovereign ratings at ‘B-/B’.

At the time, the agency cited improvements in fiscal management, monetary reforms, oil production growth, and stronger external indicators as evidence that Nigeria’s macroeconomic position was stabilising.

The positive outlook revision reflected increasing confidence in reforms initiated by the Tinubu administration, including exchange rate unification, fuel subsidy removal, revenue reforms, and the expansion of domestic refining operations.

S&P had stated then that the reforms were beginning to improve Nigeria’s growth prospects and strengthen macroeconomic resilience despite persistent structural challenges.

The agency also revised its medium-term growth projections for Nigeria upward to an average of 3.7 per cent between 2025 and 2028 from an earlier forecast of 3.2 per cent.

Inflation was projected to decline gradually to around 13 per cent by 2028 if reform momentum is sustained.

Nigeria’s external position also improved during the review period, supported by stronger diaspora remittances, increased foreign portfolio inflows, and improved confidence in the naira following reforms in the foreign exchange market.

The country’s removal from the Financial Action Task Force grey list further contributed to improved external financing conditions and investor sentiment.

S&P said fiscal reforms introduced by the Federal Government were also central to the latest ratings action.

The agency specifically referenced Executive Order 9 of 2026, signed by President Tinubu, which mandates the Nigerian National Petroleum Company Limited to remit a larger share of petroleum revenues directly into the Federation Account Allocation Committee.

The executive order forms part of broader fiscal reforms aimed at improving revenue transparency, strengthening federation earnings, and reducing leakages in the oil and gas sector.

Implementation of the order formally commenced following the inaugural meeting of the implementation committee held on February 26, 2026.

Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the committee reaffirmed the President’s directive that petroleum revenues accruing to the federation must be managed in a manner that supports constitutional principles, protects federation earnings, and strengthens fiscal stability across all levels of government.

According to the minister, “In line with the President’s directive, NNPC Limited shall cease, with immediate effect, the collection of the 30% management fee and the 30% frontier exploration fund deductions from profit oil and profit gas under Production Sharing Contracts.”

The government also suspended remittances of gas flare penalties into the Midstream and Downstream Gas Infrastructure Fund in line with the executive order.

The implementation framework further includes direct remittance provisions requiring contractors to make payments into the Federation Account under a phased transition process designed to avoid disruption to existing petroleum financing arrangements.

The committee also established a technical subcommittee tasked with developing operational guidelines and reviewing sections of the Petroleum Industry Act considered to weaken federation revenues.

Members of the technical subcommittee include representatives from the Ministry of Justice, the Nigeria Revenue Service, the Budget Office of the Federation, and the Forum of Commissioners of Finance.

S&P projected that the fiscal reforms could significantly improve government revenue performance over the medium term.

The agency forecast that government revenue could rise to 12.4 per cent of GDP in 2026 from 7.3 per cent recorded in 2023.

Debt servicing pressures are also expected to moderate gradually as revenue conditions improve and external liquidity strengthens.

Despite the upgrade, S&P warned that risks to Nigeria’s sovereign outlook remain.

The agency stated that Nigeria’s ratings could face downward pressure if implementation of the reform programme weakens or if fiscal conditions deteriorate substantially.

“We could lower the ratings if the implementation of Nigeria’s reform program, including the series of critical steps taken to liberalize the exchange rate in 2023, reverses, or if fiscal policy becomes more expansionary, resulting in widening fiscal and external deficits, or if we see significantly increased debt-servicing requirements,” S&P warned.

The agency also acknowledged persistent structural weaknesses within the Nigerian economy.

According to the report, GDP per capita remains relatively low at around $1,200, while poverty levels remain elevated despite improving macroeconomic indicators.

Inflationary pressures also continue to affect household purchasing power, although the pace of inflation is expected to moderate gradually over the medium term.

S&P noted that Nigeria’s large informal economy continues to complicate revenue mobilisation and economic assessment, while weaknesses in statistical infrastructure remain a challenge for policy planning and macroeconomic analysis.

Nevertheless, the agency maintained that Nigeria’s overall reform trajectory remains positive and could support additional rating improvements if current gains become more entrenched.

According to S&P, continued progress in fiscal consolidation, oil sector recovery, exchange-rate stability, and non-oil economic expansion would further strengthen Nigeria’s sovereign credit profile over time.

Analysts say the latest upgrade is likely to improve Nigeria’s attractiveness to international investors, strengthen access to external financing, and reduce sovereign borrowing costs if macroeconomic stability is sustained.

The development also positions Nigeria among African economies currently benefiting from positive sovereign rating actions linked to reform-driven fiscal restructuring, stronger external liquidity, and improving macroeconomic management.

Economic analysts further noted that the upgrade could improve investor confidence in Nigerian financial markets, particularly as the government continues efforts to stabilise inflation, deepen foreign exchange reforms, and strengthen public revenue mobilisation.

The sovereign rating improvement comes at a time when the Federal Government is intensifying implementation of broader economic reforms aimed at restoring fiscal sustainability, improving investment conditions, and reducing structural imbalances within the economy.

Market participants are expected to monitor future policy implementation closely, particularly in areas relating to fiscal discipline, exchange-rate management, oil revenue transparency, and debt sustainability.

S&P maintained that while Nigeria’s reform programme has strengthened macroeconomic conditions, sustained policy consistency would remain critical to preserving investor confidence and supporting further improvements in the country’s sovereign credit outlook.