Moody’s changes Nigeria’s outlook to positive, affirms B3 rating

Moody’s has upgraded Nigeria’s credit outlook to positive and maintained its B3 long-term foreign and local currency issuer ratings. The agency's assessment highlights improvements in Nigeria's external position and stronger-than-expected economic growth, which could enhance the country's resilience to external shocks and strengthen its economic stability.

These positive changes have been driven by substantial current account surpluses, increased foreign exchange reserves, more effective monetary policy transmission and gradually higher oil production. According to Moody’s, Nigeria's external position has significantly strengthened over the past year, with the current account surplus exceeding expectations.

The agency projects the current account surplus to expand to about 6.1% of Gross Domestic Product in 2026 before reducing to 4.1% in 2027. Furthermore, Nigeria's gross foreign exchange reserves, excluding precious metals and international reserves, have risen to approximately 31.2 billion dollars, covering about six months of imports.

Despite the positive outlook, Moody’s acknowledges persistent fiscal challenges due to limited revenue generation and debt affordability, with government revenue constituting only around 10% of GDP. If Nigeria sustains its recent improvements and reduces vulnerability to external shocks, the positive outlook could potentially lead to an upgrade.

However, the rating could revert to stable if external buffers deteriorate, imbalances worsen, or economic growth slows significantly.