What S&P’s positive outlook rating means for Nigeria – Stakeholders
S&P Global Ratings at the weekend revised its outlook on Nigeria to “positive” from “stable” backing the country’s ongoing economic reforms, and also affirmed the country’s rating at “B-/B”. “The monetary, economic, and fiscal reforms being implemented by Nigerian authorities will yield positive benefits over the medium term,” S&P said in a statement. The agency […]
S&P Global Ratings at the weekend revised its outlook on Nigeria to “positive” from “stable” backing the country’s ongoing economic reforms, and also affirmed the country’s rating at “B-/B”.
“The monetary, economic, and fiscal reforms being implemented by Nigerian authorities will yield positive benefits over the medium term,” S&P said in a statement.
The agency said it is confident that Nigeria’s monetary, economic, and fiscal reforms will continually spur growth and sustain foreign capital inflows to the economy.
Nigeria’s determination to confront multiple macro-economic headwinds with FX reforms and ongoing turnaround in the economy have earned the economic managers global applause.
It would be recalled that in May, Moody’s upgraded Nigeria’s rating by one notch to “B3” from “Caa1”, citing notable improvements in the country’s external and fiscal positions, while Fitch last month kept its “B” rating and “stable” outlook.
The rating agencies continue to cite FX reforms instituted by the Central Bank of Nigeria (CBN) as crucial in the current macroeconomic stability and push to tame inflation.
Previous ratings
Other global rating agencies have assessed the country’s macroeconomic indexes, expressing support for the ongoing reforms amidst.
For instance, Moody’s during the May’s ratings revised Nigeria’s outlook to “stable” from “positive”, as it expects recent progress on external and fiscal fronts to continue, though at a slower pace, if oil prices fall.
The rating agency in a statement, explained that, “The recent overhaul of Nigeria’s foreign exchange management framework has markedly improved the balance of payments and bolstered the Central Bank of Nigeria’s foreign exchange reserves.”
According to Moody’s, inflationary risks in Nigeria, driven by policy shifts, have diminished. Inflation and domestic borrowing costs are showing nascent signs of easing, bolstering confidence in the stability of these policy changes, it added.
Daily Trust reports that the disinflationary trend continued yesterday with inflation dropping to 16.05 from 18.02 in September.
“The stable outlook reflects our expectations that external and fiscal improvements will decelerate but will not reverse entirely,” Moody’s added.
Before the Moody’s report on Nigeria, another rating agency, Fitch Ratings raised Nigeria’s credit rating from ‘B-’ to ‘B’, with a stable outlook.
Analysts say from exchange rate unification to reduce arbitrage in the markets, introduction of electronic FX matching platform and a new FX code to enhance transparency and efficiency in the market as well as deployment of monetary policy tightening to keep inflation on check, the Central Bank of Nigeria (CBN) has been able to achieve sustainable economic growth and exchange rate stability.
Professor Ndubisi Nwokoma, a Professor emeritus of Economics stated in a chat with our correspondent that while economic headwinds remain, the exchange rate stability has been achieved.
Already, the latest Fitch rating moved Nigeria’s long-term foreign-currency issuer default rating (IDR) from negative to stable, meaning that the country stands a better chance of attracting foreign investment, borrowing money on international markets at better interest rates, and boosting investor confidence.
Fitch also applauded the government’s commitment to policy reforms implemented since its move to orthodox economic policies in June 2023, including exchange rate liberalisation, monetary policy tightening, and steps to end deficit monetisation as well as fuel subsidies removal.
In his response, President Bola Tinubu described Moody’s Investors Service’s upgrade of Nigeria’s long-term foreign-currency issuer rating as a welcome development. The President described it as a significant vote of confidence in the country’s economic direction and ongoing reform agenda’.
He reaffirmed his administration’s commitment to maintaining prudent economic management while promoting inclusive growth.
“This upgrade signals to global investors and partners that Nigeria is back on a path of responsibility, reform, and renewed credibility. It underscores our unwavering commitment to transparency, discipline, and prosperity for all Nigerians,” he said.
“This positive rating reinforces global confidence in Nigeria’s future and represents a milestone in the administration’s goal of restoring investor trust, unlocking economic potential, and securing long-term prosperity.
“The upgrade reflects growing international recognition of Nigeria’s progress in stabilising its macroeconomic environment, enhancing fiscal transparency, improving debt sustainability, and implementing market-oriented reforms under President Tinubu’s leadership.”
What new S&P ratings means
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has reacted to the decision of S&P Global Ratings to revise Nigeria’s outlook to Positive from Stable, saying that it is a sign that economic reforms are working
The Minister, in a statement released on Saturday, said the upgrade, while affirming Nigeria’s long- and short-term ratings at ‘B-/B’, was a strong endorsement of the fiscal, monetary, and structural reforms being rolled out under President Bola Tinubu’s administration.
“I am delighted to receive the news that S&P Global Ratings has revised Nigeria’s outlook to Positive from Stable while affirming our ‘B-/B’ rating,” he said.
“This development is yet another clear signal that the difficult but necessary reforms we are undertaking are gaining traction and earning strong recognition from respected global institutions.”
The Minister highlighted that S&P’s decision echoed the agency’s recognition of improved growth prospects, strengthening external buffers, and clearer monetary policy outcomes, which are beginning to materialise as the reforms take hold.
“These positive signals reinforce our commitment to staying the course,” Edun added. “While we are fully aware that more work lies ahead, the foundations we are building today will support inclusive and sustainable growth for years to come.”
He commended President Tinubu for what he described as “unwavering leadership and political courage” in pushing reforms that had long been delayed and also acknowledged the resilience of Nigerians navigating the transition.
“We will continue to implement well-coordinated policies that restore macroeconomic stability, attract investment, and create opportunities for our citizens,” he assured.
“These positive signals reinforce our commitment to staying the course,” Edun added. “While we are fully aware that more work lies ahead, the foundations we are building today will support inclusive and sustainable growth for years to come.”
What stakeholders are saying
President, Association of Bureaux De Change Operators of Nigeria, Dr. Aminu Gwadabe, applauded the rating upgrade.
He said the FX reforms have really supported the stability in exchange rate, and is helping the economy to achieve desired growth. Other analysts described the S&P rating as ‘a significant step forward in restoring investor confidence and economic stability.”
Upon assuming office in October 2023, the CBN Governor, Olayemi Cardoso, had prioritised reforms to rebuild Nigeria’s economic buffers and strengthen resilience.
CBN’s policies, including the currency reforms, led to investment inflows from abroad, and reduced interventions in the domestic forex market.
The unification of exchange rates and the clearing of over $7 billion FX backlog raised the country’s investment outlook, with multilateral organizations, like the World Bank describing it as bold intervention to improve the economy’s sustainability in the long run.
Also, Nigeria’s sovereign risk spread has fallen to the lowest level since January 2020, erasing the premium accumulated during the pandemic and subsequent strain on its economy. All these are deliberate efforts to woo investors and sustain capital inflows to the economy.
Managing Director and Chief Executive Officer of Ambosit Capital Managers, Dr. Wahab Balogun, stated that a better credit rating provides a foundation for Nigeria to re-engage international capital markets under more favourable terms, potentially reducing debt service costs and freeing up fiscal space for development spending.
“With the stable outlook assigned by Moody’s, Nigeria is not expected to face an imminent downgrade or upgrade. This indicates that the reforms currently in place are perceived as credible, with no immediate risks that could undermine the rating. It also reinforces the view that the government’s policy direction is yielding early positive results, though sustained implementation will be necessary to achieve long-term benefits,” he said.
He added that “the dual upgrades by Fitch and Moody’s have been received in financial and investment circles as indicators of Nigeria’s return to a path of responsible economic management, capable of restoring the country’s standing in global finance.”
As Nigeria seeks to attract more private capital—both domestic and international—to power its development priorities, analysts say the improved ratings could become a useful lever in supporting long-term plans for economic diversification, infrastructure development, and inclusive growth.
The CBN recently took strategic step to enhance transparency and boost market confidence with the inauguration of the Nigeria Foreign Exchange Code (FX Code) in Abuja. The FX Code has so far ignited naira stability at both official and parallel markets.
Cardoso recently launched the FX Code, emphasising integrity, fairness, transparency, and efficiency as critical pillars for driving Nigeria’s economic growth and stability.
He emphasized that the FX Code was built on six core principles: ethics, governance, execution, information sharing, risk management and compliance, as well as confirmation and settlement processes.
These principles, he explained, aligned with international standards while addressing the unique challenges within Nigeria’s foreign exchange market.
According to Cardoso, “The FX Code represents a decisive step forward, setting clear and enforceable standards for ethical conduct, transparency, and good governance in our foreign exchange market. The era of opaque practices is over. The FX Code marks a new era of compliance and accountability. Under the CBN Act 2007 and BOFIA Act 2020, violations will be met with penalties and administrative actions.”
Speaking at a strategic session in Abuja shortly after the announcement, Cardoso said the CBN’s recent measures are anchoring stability across financial markets and helping rebuild credibility after years of volatility.
He stated that the revised outlook as evidence that investors are taking note of the government’s efforts.
Cardoso told participants that the CBN had “brought stability to the economy and become a beacon of hope,” emphasising that policy consistency remains essential as global headwinds challenge emerging-market economies.