S&P Global Ratings has upgraded Nigeria's sovereign credit rating for the first time in 14 years. The agency raised the country's long-term foreign currency rating from 'B-' to 'B' on Wednesday.
Strong economic reforms drove the decision. S&P cited sustained policy changes, improved external buffers, and expanding domestic refining capacity as key factors.
This marks a significant shift in how global markets view Africa's largest economy. Fitch and Moody's both delivered positive rating actions in 2025, signalling growing confidence.
Nigeria's government hailed the upgrade as vindication of its reform blueprint. The administration has pushed foreign exchange liberalisation, fiscal consolidation, and tax system overhauls.
Taiwo Oyedele, the Finance Minister, told reporters the decision validates Nigeria's reform trajectory. "This reinforces growing international confidence in our economic direction," he noted.
Oyedele highlighted improvements in Nigeria's external position and balance of payments dynamics. He also pointed to rising oil production and expanding domestic refining as critical gains.
A major pillar of the reform agenda centres on widening the tax base. Government projections target an increase in the tax-to-GDP ratio from roughly 13 percent to 18 percent.
Oil output recovery and non-oil sector gains should support growth. The International Monetary Fund projects Nigeria's economy will expand by about 4.1 percent in 2026.
Exchange rate liberalisation has been transformative for the country. The policy reduced distortions in the foreign exchange market and improved price discovery mechanisms.
Since reforms began in 2023, the naira has stabilised somewhat. Tighter monetary policy and improved FX inflows from oil and non-oil sources have helped steady the currency.
Yet challenges remain significant. Nigeria still sits at 'B', five notches below investment grade status.
This means global investors still view the country as high risk. Borrowing cost relief will likely be modest at this rating level.
Revenue mobilisation remains crucial to Nigeria's economic stability. Officials estimate tax reforms could lift collections by up to 46 percent next year.
S&P also noted improvements in Nigeria's debt-to-revenue position since 2023. The agency expects further gains if revenue reforms continue uninterrupted.
Geopolitical tensions in the Middle East have provided temporary fiscal breathing room. Higher global oil prices have boosted Nigeria's export earnings and government revenue.
But the macroeconomic picture stays mixed despite reform momentum. Nigeria cannot rely on oil prices alone to sustain progress.
Consistency in policy implementation will determine whether the upgrade leads to another. Officials must maintain fiscal discipline and push through difficult reforms.
