Femi Odewunmi

In its latest sovereign review, Standard & Poor’s (S&P) Global Ratings delivered one of the clearest external signals yet that Nigeria’s economic reform programme is beginning to shift international sentiment, raising the country’s outlook from “stable” to “positive” in what many observers see as an early marker of regained macroeconomic credibility. The revision, issued in the agency’s November 14 update, reflects a recalibrated view of Nigeria’s policy direction after a year of more coordinated monetary, fiscal, and structural actions.

Rather than immediately altering Nigeria’s sovereign rating, S&P’s revision effectively opens the door to an upgrade by signalling that the country’s policy direction is finally aligning with global expectations. The outlook change reflects a growing confidence that the reforms now underway are not episodic, but part of a consistent macroeconomic reset with potential to reshape Nigeria’s investment narrative.

For Nigeria, arguably the world’s largest Black economy and a critical anchor on the continent, S&P’s shift represents more than a routine recalibration. It is a signal that the country’s reform effort is beginning to restore credibility where it matters most: in the eyes of global markets that traditionally respond only to sustained policy discipline. Ratings agencies tend to move cautiously, making this revision an early but important indication that Nigeria’s reforms are gaining traction and reshaping external perception.

S&P acknowledged that structural challenges remain, ranging from low GDP per capita to high debt-service pressures and historical gaps in revenue performance, but concluded that current actions are beginning to “improve the economy’s growth prospects and macroeconomic resilience”. This suggests that, for the first time in several years, Nigeria appears to be charting a more predictable and sustainable policy path.

The agency’s decision was shaped by three major developments: assertive monetary tightening by the Central Bank of Nigeria (CBN); a strengthened fiscal posture under the Ministry of Finance; and sustained political backing for structural reforms from the Presidency. In combination, these actions are beginning to correct distortions in the FX market, bring greater discipline to public finance, and move Nigeria away from the reactive patterns that previously unsettled investors.

The Cardoso-led Central Bank has been central to this shift. Over the past year, the CBN has pursued an aggressive tightening cycle to curb excess liquidity and arrest inflationary pressures, which, although still elevated, are showing early signs of directional moderation. Equally significant has been the bank’s effort to restore transparency and functionality within the foreign-exchange market—clearing inherited FX backlogs, reactivating open market operations, and reintroducing market-reflective pricing mechanisms. These measures have helped rebuild trust in Nigeria’s monetary framework, with S&P noting that recent actions point to an improved separation between monetary and fiscal operations.

Nigeria’s fiscal management has also factored strongly into the positive outlook. The Ministry of Finance has adopted a more structured approach to revenue mobilisation, public expenditure, and debt management. Improvements in non-oil revenue collection, more predictable budget financing, and more transparent engagement with creditors have contributed to a clearer fiscal strategy. Nigeria’s successful Eurobond issuance earlier in the year, completed despite global financial volatility, was cited as evidence that markets are responding to improved fiscal messaging. According to S&P, while consistent implementation remains crucial, the direction of travel reflects a more coherent fiscal architecture than the country has exhibited in recent years.

Political will has been equally decisive. The Presidency’s commitment to politically difficult reforms—such as fuel subsidy removal, exchange-rate flexibilization, tax restructuring, and enhanced public financial management, has signalled that Nigeria is prepared to weather short-term discomfort for long-term macroeconomic stability. The signing of the 2025 budget and repeated commitments to fiscal discipline reinforce the view that policy reversals are less likely in the near term. S&P noted that this continuity has strengthened its confidence in the country’s medium-term prospects.

Still, Nigeria’s progress is not without risks. S&P identified lingering vulnerabilities, including high inflation, FX market fragility, revenue leakages, and weak household purchasing power. Structural bottlenecks and reform fatigue also pose challenges. Yet the agency’s assessment is that Nigeria now has a more credible institutional framework to confront these issues than it did a year earlier. The risks remain, but the country’s capacity to manage them appears to be improving.

The broader implications for the economy are substantial. A more positive external assessment can lower borrowing costs, ease currency pressures, improve access to concessional financing, and enhance investor appetite—all of which have knock-on effects for business confidence and job creation. While households may not feel immediate relief, clearer policy signalling typically encourages private-sector expansion, stabilises inflation expectations, and supports medium-term growth.

If Nigeria sustains its current trajectory, these gains should gradually find expression in the real economy: more predictable FX markets, improved capital flows, and a more stable inflation outlook. The positive revision, therefore, serves both as recognition of progress made and as an incentive for continued discipline. For the first time in several years, a global ratings agency is indicating that Nigeria’s fundamentals may be turning a corner, provided the country stays committed to the reforms now underway.

·          Odewunmi is Group CEO of Creative Intelligence Group, a strategic communications and policy advisory firm advising public institutions on policy communications and credibility-building across governance and economic policy

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