JUST IN… TINUBU REFORMS WIN MORE GLOBAL CONFIDENCE AS FITCH LIFTS NIGERIA’S OUTLOOK

…Cheaper finance, more jobs, stronger naira in sight as Nigeria moves closer to investment grade

By Our Reporter
Nigeria’s latest vote of confidence from global ratings agency Fitch could ultimately mean much more to ordinary Nigerians than improved numbers on an international economic scorecard — potentially opening the door to cheaper global finance, greater investment, more jobs, a more stable naira and further relief from inflation.

That is the central message emerging from the Federal Government after Fitch Ratings revised Nigeria’s credit outlook from Stable to Positive while affirming the country’s Long-Term Issuer Default Rating at ‘B’.

The decision moves Nigeria another step in the direction of the Federal Government’s ultimate ambition of attaining investment-grade status, although the country remains some distance from that threshold.

Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, said on Saturday that the government was not pursuing improved ratings simply for international recognition, but because a stronger credit profile could lower Nigeria’s cost of capital, attract private investment and create jobs.

For households struggling with food, transportation, rent and other living costs, perhaps the most significant number in the Fitch assessment is inflation.

The agency expects average inflation to moderate to 15.4 per cent in 2026, less than half its 2024 level.

Slower inflation does not mean that prices already increased will automatically fall. But if sustained, it means the speed at which food, transportation and other prices rise will continue to ease, providing a pathway towards greater stability in household budgets and purchasing power.

The country’s stronger sovereign credit profile reduces the risk premium investors demand for lending. If Nigeria continues along that path and eventually secures further rating upgrades, government borrowing for critical infrastructure could become cheaper.

Over time, that could reduce pressure on domestic interest rates and leave more credit available to businesses, manufacturers, and entrepreneurs — and translate into business expansion and employment.

Fitch noted that Nigeria’s gross external reserves stood at $54.9 billion on September 25, compared with $32 billion in mid-April 2024.

For Nigerians, stronger reserves provide the Central Bank with a bigger buffer against external shocks and could help sustain stability in the foreign exchange market.

A more predictable naira would particularly matter to manufacturers and other businesses that depend on imported machinery, raw materials, and intermediate goods. Reduced exchange-rate volatility makes costs easier to plan and could ultimately help reduce the constant repricing of goods faced by consumers.

Fitch projected Nigeria’s current account surplus at 6.4 per cent of GDP in 2026, another indication of the strengthening external position.

The ratings agency expects Nigeria’s economy to expand by 4.3 per cent in 2026, accelerating from 4 per cent in 2025, with growth remaining above 4 per cent in 2027 and 2028.

Crucially, Fitch expects much of that expansion to come from the non-oil economy.

That matters because agriculture, manufacturing, services, technology, construction, and other non-oil sectors have a more direct capacity to generate employment and incomes across a wider section of the population than oil production alone.

Fitch also noted that crude production had met Nigeria’s OPEC target of 1.5 million barrels per day since May, while growing domestic refining capacity was reducing the country’s dependence on imported petroleum products.

Producing more of the fuel Nigeria consumes domestically potentially saves foreign exchange, supports local industrial activity, and reduces the economy’s exposure to disruptions in international refined-product markets.

The implications of Nigeria’s improving creditworthiness could become even more significant if it attracts greater foreign and domestic investment.

Investors generally attach lower risk premiums to economies with stable currencies, declining inflation, healthier reserves, and predictable economic policies.

More investment in factories, agriculture, infrastructure, technology, and services means new businesses, expanded production, and ultimately more jobs.

The Federal Government, however, acknowledged that improving macroeconomic statistics have not yet translated sufficiently into improved living standards for millions of Nigerians.

Inflation remains high despite its decline, government revenues remain relatively low compared with the size of the economy, and interest payments continue to consume a substantial share of public revenue.

The challenge facing the Tinubu administration, therefore, is increasingly shifting from stabilising the economy to ensuring that the benefits of that stability reach households.

Oyedele said this would involve converting macroeconomic gains into what he described as “shared prosperity”, with emphasis on food security, decent jobs, human development, and support for small businesses.

The government also hopes that higher revenues generated by the new tax system will eventually give it greater capacity to fund infrastructure and social programmes without relying excessively on borrowing.

Fitch expects Nigeria’s general government debt to average about 32 per cent of GDP between 2026 and 2028, considerably below the 56 per cent median for countries carrying a ‘B’ rating.

The agency also highlighted the strength of Nigeria’s domestic debt market and the ongoing recapitalisation of the banking sector, noting that many banks now maintain capital adequacy ratios above 20 per cent.

Fitch’s decision adds to a broader improvement in international assessments of Nigeria in 2026, alongside positive rating actions by S&P Global Ratings and Moody’s, as well as Nigeria’s return to FTSE Russell’s Frontier Market status.

But for millions of Nigerians, the real test is not the verdict from Fitch, Moody’s or S&P, but whether food becomes more affordable, the naira becomes more predictable, businesses can borrow at lower rates, factories expand, young people find jobs and household incomes begin to recover.

Oyedele said that is precisely why the government considers the Fitch announcement important.

“Our medium-term ambition is to place Nigeria firmly on the path to investment grade,” he said.

“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.”