- S&P Lifts Nigeria’s Sovereign Rating to ‘B’ as Oil, Refining and FX Reforms Boost Outlook
S&P Global Ratings has upgraded Nigeria’s long-term sovereign rating to “B” from “B-”, citing an improving macroeconomic profile and stronger creditworthiness in Africa’s largest economy by population.
The ratings agency also revised Nigeria’s outlook to stable from positive, indicating that while recent reforms have improved the country’s credit profile, the rating now reflects a more balanced assessment of upside and downside risks.
S&P said higher oil production and prices, a significant increase in domestic refining capacity and the government’s 2023 decision to liberalise the exchange rate are supporting Nigeria’s economic growth and balance of payments outcomes.
The upgrade marks another vote of confidence in President Bola Tinubu’s reform programme, which has included the removal of fuel subsidies and the liberalisation of the foreign exchange market. Those reforms have been painful for households and businesses, but ratings agencies and multilateral institutions increasingly view them as important to restoring macroeconomic credibility.
Nigeria has been attempting to move from crisis adjustment to economic consolidation after years of weak growth, currency pressure, elevated inflation and fiscal strain. The removal of the petrol subsidy and the loosening of currency controls initially triggered sharp price increases and exchange-rate volatility, but the government has argued that the measures were necessary to correct long-standing distortions.
S&P’s decision suggests that the agency now sees a stronger basis for external stability, especially as Nigeria benefits from improved oil-sector performance and expanding domestic refining.
The World Bank said in April that it expects Nigeria’s economy to grow by about 4.2% in 2026, despite the impact of the Iran war, while urging authorities to save windfalls from stronger oil prices, maintain tight monetary policy and avoid broad subsidies to help contain inflation.
That advice points to the central policy test facing Abuja: whether reform gains can be preserved in an environment of higher energy prices, social pressure and political demands for relief.
Nigeria had made progress in reducing price pressures before the U.S.-Israeli war with Iran, with inflation easing for 11 consecutive months before edging up in March. But the conflict pushed up fuel costs and fed through to food prices, while headline inflation rose for the second consecutive month in April.
S&P, however, said Nigeria is less exposed to Middle East conflict spillovers than many regional peers because it is a sizeable net exporter of crude oil and is emerging as a producer of refined fuels.
That distinction is important. For many African economies, higher global oil prices worsen import bills, weaken currencies and intensify inflation. Nigeria’s position is more complex: higher crude prices can support export earnings and government revenue, but domestic fuel prices and transport costs can still transmit pressure to consumers.
The growth outlook has also improved. S&P said it expects Nigeria’s real GDP per capita to rise by an average of 1.4% per year until 2029, a significant turnaround from the average 1% annual contraction recorded over the past decade.
For investors, that projection matters because Nigeria’s long-term economic story has often been undermined by weak per-capita growth, even when headline GDP expanded. A sustained improvement in real income per person would signal that reforms are beginning to translate into broader economic gains.
Still, the upgrade does not remove Nigeria’s structural challenges. Inflation remains high, debt-servicing costs continue to weigh heavily on public finances, and the naira remains vulnerable to shifts in foreign exchange liquidity and investor confidence. Earlier this week, President Tinubu called for reforms to the global financial system, arguing that high debt-service costs are crowding out development spending across African economies. Reuters reported that Nigeria is projected to spend US$11.6 billion on debt payments in 2026, nearly half of government revenue.
The rating upgrade may therefore improve sentiment, but it does not eliminate fiscal pressure.
For Nigeria, the immediate benefit is reputational. A stronger rating can help lower perceived sovereign risk, support investor confidence and improve the government’s ability to access international capital markets on more favourable terms, depending on global conditions.
For African markets more broadly, the decision reinforces a pattern in which reforming economies are beginning to receive more favourable assessments from rating agencies after years of downgrades, debt distress and investor caution.
Nigeria’s upgrade is therefore not merely a technical ratings action. It is a signal that orthodox reforms however politically costly are beginning to reshape the country’s macroeconomic narrative.
The harder question is whether the benefits will reach households fast enough.
Tinubu’s reforms have improved the policy framework, but they have also intensified cost-of-living pressures. If inflation remains elevated or fuel costs continue to rise, public support for reform could weaken.
The challenge for Abuja is to ensure that the rating upgrade becomes more than a market signal and begins to translate into lower borrowing costs, stronger investment, more stable prices and inclusive growth.
