Moody's lifts Nigeria's outlook to positive on reserves, growth

Moody's affirmed Nigeria's long-term foreign and local currency issuer ratings at B3 while revising the country's outlook to positive, citing improvements in its external position, foreign exchange market, reserves and monetary policy transmission. The August 28 decision marks a second consecutive upgrade in sentiment from the rating agency.

Stronger buffers. Foreign exchange reserves crossed $53 billion for the first time in more than 17 years, reaching $53.11 billion as of August 24, 2026, after rising by $7.09 billion since the start of the year. Moody's projected that Nigeria's current account surplus could reach about 6.1 per cent of GDP in 2026.

Growth beats forecasts. The Gross Domestic Product (GDP) in Nigeria expanded 4.43 percent in the second quarter of 2026 over the same quarter of the previous year. Rising oil production is expected to provide an additional boost to growth in 2026 and 2027, alongside the Dangote refinery's contribution to non-oil expansion.

Path to cheaper capital. A positive outlook signals Moody's may upgrade Nigeria's rating within 12–18 months if reforms hold. An improved sovereign credit rating could eventually reduce the cost of accessing international financing and strengthen investor confidence. For investors in Nigerian equities, lower sovereign risk premia could lift valuations in banking (FBNH, GTCO, UBA, ZENITHBANK), oil & gas (SEPLAT, OANDO), and consumer stocks tied to import-dependent supply chains.

Reform dividend. The rating action comes after several years of economic reforms by the Federal Government, including the removal of the fuel subsidy, exchange-rate unification and tax reforms. Sustained FX stability and reserve accumulation improve visibility for companies with dollar obligations, critical for manufacturers, telecoms (MTNN, AIRTELAFRI), and firms servicing Eurobond debt.

What to look out for

Watch whether Nigeria sustains its current account surplus if oil prices retreat from elevated levels linked to Middle East supply risks. Moody's retained the B3 rating, citing persistent fiscal challenges, particularly Nigeria's limited revenue-generation capacity and weak debt affordability; any slippage in tax revenue or debt-service ratios could stall the upgrade cycle.