As Moody’s Economic Rating Shows Stable Economy
Lawal Dahiru Mamman
The Nigerian economy has been on a rollercoaster ride for the past two years. Citizens, businesses and foreign investors have barely stayed afloat. The economic struggles have left many wondering about its stability and eventual growth especially with President Bola Ahmed Tinubu’s ambitious $1 trillion economy drive.
Recent developments have brought a glimmer of hope with global credit ratings agency Moody’s upgrading Nigeria’s sovereign rating from Caa1 to B3, signaling substantial progress in the nation’s external and fiscal positions. This positive revision is a testament to growing confidence in Nigeria’s economic stability and future outlook.
Such upgrade coming at this time is a welcome relief for a country that has faced numerous economic challenges. According to Moody’s, the recent overhaul of Nigeria’s foreign exchange management framework has “markedly improved the balance of payments and bolstered the Central Bank of Nigeria’s foreign exchange reserves.”
This improvement has been a key factor in the rating upgrade, which also comes with a stable outlook. As Moody’s notes, “The stable outlook reflects our expectations that external and fiscal improvements will decelerate but will not reverse entirely.”
The upgrade is not only a vote of confidence from Moody’s; it signifies growing trust both externally and internally in the Nigerian economy. The World Bank has also recognized Nigeria’s notable economic performance, reporting that the nation recorded its fastest growth in nearly a decade in 2024.
According to the bank, the fast paced growth was driven by a robust fourth-quarter expansion and enhanced fiscal management. The World Bank’s assessment is a testament to the progress Nigeria has made in stabilising its economy.
Moody’s rating and World Bank’s comments are not isolated, Fitch Ratings has also upgraded Nigeria’s outlook to “stable” from “negative”. For perspective, Fitch Ratings is a global credit rating agency that provides credit ratings, research, and analysis to investors, issuers, and financial institutions. They assess the creditworthiness of companies, governments, and financial instruments.
It highlighted renewed confidence in the Tinubu administration’s commitment to far-reaching policy reforms. According to Fitch, the economic direction taken since mid-2023 is starting to bear fruit, with reforms such as exchange rate liberalization, tighter monetary policy, and the removal of fuel subsidies improving macroeconomic credibility and reducing distortions.
“We are seeing clear signs of increased commitment to market-based reforms under President Tinubu’s administration,” Fitch stated.
These positive developments are a result of sustained and deliberate efforts to stabilise the economy. The Central Bank of Nigeria’s introduction of a new foreign exchange matching platform and foreign exchange code in 2024 has enhanced price discovery and transparency, helping to narrow the official-parallel market gap and boost foreign exchange liquidity.
Despite these positive developments, experts caution that persistent inflation remains a challenge, requiring sustained economic policies to ensure long-term stability.
Thus, Olayemi Cardoso, who heads the apex bank alongside his team, must sustain the tempo, devise new means, and remain resolute until Nigeria’s economy becomes a force to reckon with, not just in Africa, but on the global stage.