Nigeria targets investment grade as Fitch raises outlook to positive

By Onu Okorie

Nigeria has set its sights on attaining an investment-grade sovereign credit rating as the Federal Government seeks to leverage improving external reserves, easing inflation and fiscal reforms to reduce the country’s cost of borrowing and attract more private capital.
The ambition received a boost after international credit rating agency Fitch Ratings revised Nigeria’s economic outlook to Positive from Stable, while affirming the country’s Long-Term Issuer Default Ratings at ‘B’.
The October 9 decision raises the prospect of a future sovereign rating upgrade if Nigeria sustains its reform programme, strengthens government revenue and continues to bring inflation under control.
Minister of Finance and Coordinating Minister of the Economy, Prof. Taiwo Oyedele, said the government’s medium-term objective was to put Nigeria firmly on a path towards investment grade—not merely to secure a better rating, but to lower financing costs, attract private investment and expand employment.
“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,” Oyedele said in a statement issued in Abuja on Saturday.
For Nigeria, the significance of the Fitch decision extends beyond the rating itself. Sovereign credit assessments influence how international investors price the risks associated with lending to governments and, indirectly, businesses operating within their economies.
A sustained improvement in Nigeria’s credit profile could therefore strengthen investor appetite for Nigerian assets and, over time, help reduce the risk premium demanded on government and corporate borrowing.
Fitch maintained Nigeria’s sovereign rating at ‘B’ but said changes in the policy framework, stronger external buffers and increased confidence that reforms would continue justified the Positive Outlook.
A Positive Outlook means the rating could be upgraded if favourable economic trends and policy implementation are sustained.
One of the strongest improvements identified by the agency was Nigeria’s external reserve position.
Gross foreign exchange reserves increased to $54.9 billion as of September 25, 2026, compared with $32 billion in mid-April 2024.
Fitch attributed the improvement to greater formalisation of foreign exchange transactions, strong portfolio inflows and higher export earnings and remittances.
It said improvements in the quality of the reserves had also strengthened Nigeria’s capacity to absorb external shocks.
The rating agency projected a current-account surplus equivalent to 6.4 per cent of Gross Domestic Product in 2026, providing an additional buffer for the economy.
Nigeria’s growth outlook has also strengthened, with Fitch forecasting GDP growth of 4.3 per cent in 2026, up from four per cent in 2025.
Growth is expected to remain above four per cent in 2027 and 2028, supported mainly by non-oil economic activities.
The oil sector is nevertheless providing additional support.
According to Fitch, crude production has met Nigeria’s OPEC target of 1.5 million barrels per day since May 2026, while expanding domestic refining capacity is reducing the need for imported petroleum products and easing pressure on foreign exchange demand.
Inflation, another major consideration for investors and rating agencies, is also projected to moderate.
Fitch expects average inflation to decline to 15.4 per cent in 2026, less than half the level recorded in 2024.
On fiscal sustainability, the agency expects implementation of the government’s tax reforms to improve non-oil revenue relative to GDP.
It projects Nigeria’s general government debt to average about 32 per cent of GDP between 2026 and 2028, compared with a median of 56 per cent among sovereigns carrying a ‘B’ rating.
The relatively low debt-to-GDP ratio, however, masks one of the government’s biggest fiscal constraints—the high proportion of revenue absorbed by interest payments.
Fitch identified weak government revenue and elevated interest costs, alongside inflation that remains high compared with peer economies, among the vulnerabilities that could constrain further improvement in Nigeria’s credit standing.
This means the next phase of the government’s rating ambition may depend less on the absolute size of public debt and more on its ability to expand revenue and reduce the burden of servicing that debt.
Fitch also pointed to Nigeria’s liquid domestic debt market and the recapitalisation of the banking industry as positive factors, noting that many banks now have capital adequacy ratios exceeding 20 per cent, comfortably above regulatory minimum requirements.
The latest assessment adds to a succession of favourable international ratings and market decisions cited by the government.
Oyedele said S&P Global Ratings upgraded Nigeria from ‘B-’ to ‘B’ in May, while Moody’s Ratings revised the country’s outlook to Positive in August. FTSE Russell also returned Nigeria to Frontier Market status effective September 21, 2026.
According to the minister, the developments indicate increasing international confidence in the direction of economic policy under President Bola Tinubu.
“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,” he said.
But converting improved ratings sentiment into cheaper financing and better living conditions remains the bigger test.
Oyedele acknowledged that substantial challenges persist and said the government would focus on sustaining a transparent, market-reflective foreign exchange regime, implementing new tax laws, strengthening tax administration and improving expenditure, budget execution and debt management.
The government also plans to deepen structural reforms supporting non-oil growth and economic diversification.
According to the ministry, greater attention will be directed at ensuring that improving macroeconomic indicators translate into food security, employment, human development and stronger support for small businesses.
Fitch indicated that any further positive rating action would depend on sustained disinflation, continued implementation of reforms, stronger external buffers and improved mobilisation of non-oil revenue.
That leaves Nigeria’s investment-grade ambition dependent not only on maintaining the reform momentum but also on whether the government can turn stronger reserves, moderating inflation and improving growth into lower financing costs, stronger investment and tangible gains for households and businesses.