Nigeria Country Risk Rating
Overall risk in Nigeria remains at a high rating.
Nigeria's overall risk is high. President Bola Tinubu will seek a second and final term in the January 2027 election, having won his party's primary by a wide margin against a minor challenger, and his APC now controls 31 of the 36 states, up from 21 in 2023. His first term brought in reforms meant to lift the economy and win back investors, but many Nigerians are still worse off, as inflation, though down from about 30% in 2024 to near 15% in early 2026, remains high, fuel prices have quadrupled in four years, and around 60% of the population now lives in poverty on World Bank figures, a four-point rise since Tinubu took office. The naira has been steadier as FX reserves rose to a multi-year high above USD 51bn, though this leans heavily on oil earnings and foreign inflows. On balance the government is sticking to its reform path rather than easing off before the vote. The main risks ahead are the uncertain global backdrop, especially fuel and food prices, and a domestic security situation that threatens both people and the economy, with jihadist insurgency by Boko Haram and ISWAP in the north east and mass kidnapping by armed bandits in the north west. Political violence is very high and political interference is high.
Nigeria has brought in reforms to simplify permits, digitize registrations and ease tax procedures, including the new Tax Act that takes effect in 2026, but corruption remains a major problem. In the 2025 Corruption Perceptions Index, published in February 2026, the country ranked 142nd of 182, which places it among the more corrupt nations assessed and well below the global average. Unclear rules, inconsistent policy and inefficient customs and government operations all persist. Against this backdrop, legal and regulatory risk stays high. Businesses also face heavy infrastructure and operational problems. Frequent power cuts, port congestion, slow customs procedures and difficult climate conditions all add to a very high risk of supply chain disruption, a strain deepened in 2026 as the Middle East conflict pushed up fuel and food prices. The naira has been steadier and Nigeria's sovereign rating was raised to B by S&P, its first upgrade since 2012, which has helped investor sentiment but the challenges described above all make the risk of doing business to be high.
On the economic front, the IMF expects growth of 4.1% in 2026, rising to 4.3% in 2027, as higher food and transport costs weigh on the economy in the near term. The Fund argues that the Middle East war takes about 0.3 points off 2026 growth, with services staying the main driver over the medium term. Inflation had been falling for more than a year but was pushed back up by the war, and the IMF now expects it to reach about 17% by the end of 2026, some three and a half points above the pre-war path, before it starts falling again as policy stays tight and supply improves. Freeing up the exchange rate has made foreign currency easier to access and helped create a more market-driven system, which has lifted investor confidence and non-oil growth, though the exchange transfer risk stays high.
On the fiscal side, ending fuel subsidies, stopping deficit monetization, tightening monetary policy and freeing the exchange rate have together cut fiscal weaknesses and rebuilt the country's buffers. Portfolio inflows have returned and Nigeria has regained access to external markets, helped by a Eurobond sale and new World Bank financing, including a recent USD 1.25bn loan. The IMF sees the risk of sovereign stress as moderate, with government debt at a manageable 32.3% of GDP in 2026 and 33.1% in 2027, which keeps sovereign non-payment a medium high risk. Fiscal pressures are still heavy, though, as the deficit stands at 4.4% of GDP in 2026 before narrowing to 2.9% in 2027. Tax reforms passed in 2025 have improved revenue and created some room to spend, but the IMF notes that a few recent changes actually cut revenue and that Nigeria still has one of the lowest revenue-to-GDP ratios in the world. That fiscal room is real but limited, since interest payments are set to eat up more than half of federal revenue through 2027, so the risk of the inability of the government to provide stimulus is medium low.