Moody's upgrades credit outlook on Nigeria due to reforms

Moody's has upgraded Nigeria's outlook to positive from stable, anticipating a potential reversal of the country's fiscal and external challenges due to ongoing reform efforts by authorities. The agency maintained its "Caa1" long-term foreign currency and local currency issuer ratings.

Nigerian President Bola Tinubu aims to stimulate growth and attract substantial investments, addressing issues such as foreign exchange shortages, low oil production, and widespread insecurity in Africa's largest economy. Tinubu has implemented significant reforms, including the removal of a costly fuel subsidy, the elimination of exchange controls, and the lifting of a ban on certain imports.

While these reforms have garnered support from investors, critics, particularly unions, argue that they have led to surging costs. Inflation in Nigeria has remained in double digits since 2016, exacerbating the erosion of savings and incomes. Moody's acknowledged the potential for fiscal and external improvements in the country's credit profile, attributing it to the implemented policy changes and those anticipated in the future.