Rating agency raises outlook to positive, citing a stronger naira, slowing inflation and record reserves

Nigeria’s economic recovery has received a major international endorsement. Fitch Ratings, one of the world’s three leading credit rating agencies, has raised its outlook on the country to positive, opening the way for a possible upgrade of its credit rating.

The decision, announced on 9 October, rewards the reforms launched by President Bola Tinubu shortly after taking office in 2023. At the time, the removal of the fuel subsidy and the unification of the exchange rate were described as the boldest economic decisions in a generation. Three years later, Fitch says these reforms are delivering results, and that it is confident the momentum “will not be disrupted by upcoming elections”.

A steadier naira, inflation halved

The most visible success is the rebuilding of Nigeria’s foreign reserves. They have risen from $32 billion in April 2024 to $54.9 billion in September 2026, an increase of more than 70%. Even more striking, the reserves the Central Bank can actually use have grown almost ninefold, from about $4 billion at the end of 2023 to $34.8 billion at the end of 2025.

Fitch attributes this performance to more dollars flowing through official channels: export earnings, foreign investment and money sent home by Nigerians abroad. The agency expects reserves to cover more than six months of external payments by the end of the year, and the naira to hold steady. For the trader in Onitsha importing goods, the manufacturer in Kano buying equipment or the family in Lagos paying school fees abroad, this stability makes it possible to plan again.

Prices are following. Fitch expects average inflation of 15.4% this year, less than half its 2024 level, and forecasts further declines as the Central Bank’s policies take hold. After years of eroding purchasing power, the trend has clearly reversed.

Growth beyond oil

The energy sector is also rebounding. Crude oil production rose 10% in the second quarter and has met Nigeria’s OPEC target since May, at 1.52 million barrels a day. At the same time, the ramp-up of the Dangote refinery and the rehabilitation of other facilities have reduced fuel imports, saving precious foreign currency.

The economy is expected to grow by 4.3% in 2026 and by more than 4% in each of the following two years, driven above all by sectors outside oil. Nigerian banks, which almost all met the government’s new capital requirements this year, now have strong balance sheets, with many posting capital ratios above 20%. They are in a position to finance businesses and jobs.

Public finances are on a sound footing too. Public debt is expected to fall from 40% of GDP in 2024 to around 32% over 2026-2028, compared with an average of 56% for countries with the same rating, placing Nigeria among the least indebted economies in its category.

Fitch has identified what could trigger an upgrade: continued disinflation, stronger reserves and higher non-oil revenue. On this last point, the government’s tax reform is expected to raise non-oil revenue to 7.5% of GDP, two-thirds of public income.

For a country that faced a currency crisis just three years ago, the verdict marks a turning point. President Tinubu’s reforms demanded sacrifices from Nigerians. Today, the world’s leading financial institutions are recognising that those sacrifices are paying off.