Nigeria\u2019s ambition to regain investment-grade credit status by 2029 may be overly optimistic, as the country faces a significant ratings gap that could take longer than three years to bridge, according to S&P Global Ratings.<\/p>\n
Samira Mensah, Managing Director for Research and Analytics in Africa at S&P, made the observation in an interview in Lagos, responding to the Federal Government\u2019s ambition to exit speculative-grade territory by 2029.<\/p>\n
She said the agency had historically not seen any sovereign move from a single-B credit rating to investment grade within three years.<\/p>\n
Finance Minister Taiwo Oyedele had disclosed last month that Nigeria was targeting a return to investment-grade status by 2029 to attract more capital, strengthen investor confidence and deepen the country\u2019s financial markets.<\/p>\n
Nigeria currently has a B rating with a stable outlook from S&P, placing it five notches below investment grade. Fitch Ratings also rates the country five levels below investment grade, while Moody\u2019s Ratings places it six levels below the threshold.<\/p>\n
She added that S&P had a long track record of assessing sovereign credit ratings and their movements over time.<\/p>\n
Despite expressing reservations about the timeline, Mensah acknowledged the Nigerian government\u2019s efforts to improve the country\u2019s economic and fiscal position.<\/p>\n
S&P upgraded Nigeria\u2019s credit rating in May for the first time since 2012, citing ongoing economic reforms, higher oil prices and improved capacity to refine and export crude oil.<\/p>\n
The upgrade reflected improved prospects for the economy following a series of policy changes introduced by President Bola Tinubu since assuming office in May 2023.<\/p>\n
Key reforms include the removal of costly petrol subsidies, the liberalisation of the foreign exchange market to allow the naira to trade more freely and changes to the tax system aimed at strengthening government revenue.<\/p>\n
The reforms are intended to improve fiscal sustainability, reduce economic distortions and strengthen the country\u2019s capacity to meet its financial obligations.<\/p>\n
S&P is scheduled to provide its next assessment of Nigeria\u2019s sovereign creditworthiness on Friday.<\/p>\n
Mensah said that while S&P commended Nigerian authorities for setting an ambitious credit rating target, the government should prioritise sustained economic improvements rather than focus exclusively on achieving a particular rating within a fixed period.<\/p>\n
According to her, making progress in the right direction remains more important than targeting a specific credit rating.<\/p>\n
Investment-grade status generally signals a lower risk of default and can help countries attract a broader pool of international investors, potentially reducing borrowing costs for governments and businesses.<\/p>\n
For Nigeria, achieving the status would represent a significant improvement in its creditworthiness after years of fiscal pressures, foreign exchange challenges and elevated debt risks.<\/p>\n