Global credit rating agency Moody’s has upgraded Nigeria’s sovereign credit rating from Caa1 to B3, signalling cautious optimism about the country’s economic direction under the Bola Tinubu administration and recent reforms implemented by the Central Bank of Nigeria (CBN).
In its latest assessment, Moody’s pointed to improvements in Nigeria’s balance of payments, a rebound in external reserves, and policy reforms that it believes have laid a foundation for greater macroeconomic stability, though risks remain.
According to the Moody’s report, the rating adjustment reflects “ongoing improvements in Nigeria’s foreign exchange framework, better transparency in monetary policy, and efforts to unify and stabilize the naira.” The agency also cited more credible fiscal planning and gradual debt restructuring as signs of improving financial governance.
“The Nigerian authorities have taken steps though still uneven to restore credibility to macroeconomic management,” the report stated.
Key to the positive outlook is the CBN’s floating of the naira and elimination of multiple exchange rates, a long-standing distortion in Nigeria’s forex market. Additionally, the CBN has cut back on quasi-fiscal interventions and increased interest rates to combat inflation.
Nigeria’s external reserves have seen modest recovery in recent months, bolstered by a rebound in crude oil earnings, tighter import controls, and renewed confidence from foreign investors and multilateral lenders.
While government officials welcomed the upgrade as validation of its economic policies, critics were quick to note that the macro-level improvements have yet to trickle down to ordinary Nigerians.
“This is good news for bondholders, not necessarily for market traders,” said Tolu Ajibola, a Lagos-based economist. “Credit upgrades make borrowing easier and cheaper, but until inflation drops and wages rise, the impact on households will be muted.”
The Federal Ministry of Finance, Budget, and Economic Planning praised the rating as a sign of international confidence in Nigeria’s fiscal path.
“This upgrade reflects the results of tough decisions,” said Finance Minister Wale Edun. “We remain committed to structural reforms that put Nigeria on a path of sustainable growth and shared prosperity.”
A B3 rating is still within speculative grade, commonly known as “junk status,” but it is a step up from Caa1 and suggests that default risk is still high, but improving. Investors and analysts interpret such upgrades as signals to re-evaluate sovereign risk exposure, often leading to better bond pricing and increased market confidence.
International investors are expected to monitor Nigeria’s fiscal discipline, forex liquidity, and progress on subsidy reform closely. Analysts warn that the country’s rising domestic debt, ongoing inflation, and heavy reliance on oil revenues still pose long-term structural risks.
Moody’s credit rating upgrade offers a modest but meaningful vote of confidence in Nigeria’s economic reforms. For the Tinubu administration, it provides external validation, but at home, the challenge remains: translating macroeconomic progress into tangible improvements in daily life.
