Asher's Blog

I read President Bola Ahmed Tinubu’s article in the Financial Times with a strong sense of alignment and hopefulness, that, this will result into something great for Africa. There are moments in a people’s journey where sentiment and narrative begin to shift before the full results become obvious, and I believe Nigeria is already in that phase. The signals are not yet loud enough for everyone to feel, but they are present and more importantly, they are consistent with what global institutions are beginning to validate.

For a long time, the narrative around Nigeria has been dominated by fragility, instability, and missed potential. And while those concerns were not unfounded, they often overshadowed a deeper truth, that Nigeria, like any other nation, has always had the underlying capacity to correct itself when the right pressures and reforms are applied. What we are witnessing now is not a miracle. It is the early outcome of difficult, often unpopular decisions that are starting to rebalance a system that was badly distorted for far too long – over 40 years of mismanagement and bad leadership. As we know to build a great edifice takes time but to turn it to rubbles takes minutes. 

The Cost of Doing Nothing

The removal of fuel subsidies, the unification of the foreign exchange market, and the broader push toward fiscal discipline at the start of his presidency were not just policy moves, they were structural corrections that were decades overdue.

For years, the economy operated with distortions that created artificial comfort, overnight billionaires, millions of impoverished communities and long-term damage. The fuel subsidy alone was consuming somewhere between $4.5 billion and nearly $10 billion annually, depending on the year, according to IMF estimates. To put that in perspective, that figure was more than four times Nigeria’s entire health budget in some periods. And yet, as research consistently showed, the bulk of that benefit was flowing to those who needed it least, while crowding out desperately needed investment in infrastructure, healthcare, and education.

Before the reforms began, Nigeria’s net foreign reserves had dropped to around $800 million, a critical and deeply alarming position for a country of over 200 million people. The country was also carrying a backlog of more than $7 billion in foreign exchange obligations owed to businesses and investors, which was steadily strangling economic activity. 

The multiple exchange rate system made things worse. The gap between the official and parallel market exchange rates had grown to a 60 percent chasm, enabling round-tripping, capital flight, and institutional corruption on a significant scale. These were not sustainable foundations for growth, they were a slow bleed.

What the Numbers Are Saying Now

What is becoming increasingly clear is that once those distortions begin to unwind, the economy starts to find its natural balance, and the data is beginning to reflect that.

The IMF, in its October 2025 World Economic Outlook, projected Nigeria’s real GDP growth at 3.9 percent in 2025, an upward revision of 0.5 percentage points from earlier forecasts, and expected further acceleration to 4.2 percent in 2026. The Fund attributed this resilience to higher oil production, a more supportive fiscal stance, and improving investor sentiment.

Nigeria’s economy expanded by 3.9 percent year-on-year in the first half of 2025, up from 3.5 percent in the same period of 2024. The country’s external position has strengthened, with foreign reserves exceeding $50 billion at some point this year, and the current account surplus rising to 6.1 percent of GDP. Compare that to the $800 million in net reserves just two years prior, and the scale of the turnaround becomes hard to dismiss. Inflation, which peaked at 33 percent, has retreated significantly. Food inflation has fallen to single digits for the first time in over a decade. Non-oil exports grew nearly 20 percent year-on-year in the first half of 2025. These are not just talking points, they are data points.

In December 2024, Nigeria issued its first Eurobond since 2022, successfully raising $2.2 billion and achieved an oversubscription rate of 300 percent. That level of investor appetite does not happen by accident. It is a signal that the market is beginning to believe in the direction of travel.

The Credit Rating Story Nobody Should Ignore

If there is one area where President Tinubu’s article deserves the strongest validation, it is here.

Credit ratings are not just technical assessments. They are the world’s most watched verdict on whether a country is being governed responsibly. When the major rating agencies move, investors move with them and this reflects on borrowing costs and capital flows. The signal is rarely subtle.

Nigeria’s recent sovereign credit rating upgrades, by Fitch to B from B minus on 11 April 2025 and by Moody’s to B3 from Caa1 on 30 May, are more than symbolic milestones. They are a forceful signal that credible reforms, when sustained, can turn the tide of investor sentiment and restore confidence in one of Africa’s largest economies.

To understand the significance of the Moody’s move in particular, you have to understand where Nigeria was coming from. A Caa1 rating sits deep in speculative territory, the kind of rating that makes institutional investors deeply cautious and drives up the cost of every dollar borrowed on international markets. Moving to B3 is not just a notch on a chart, it is a meaningful shift in how the world prices Nigeria’s risk.

Fitch explicitly cited improved policy coherence and credibility and greater transparency in foreign exchange operations. Moody’s pointed to the government’s commitment to macroeconomic stabilisation despite fiscal and external headwinds. These are not vague endorsements but specific, evidence-based assessments from institutions that do not upgrade lightly and have no political reason to be generous. The upgrade affected investor confidence immediately and measurably. Nigeria’s Eurobond yields fell by over 130 basis points following the Moody’s upgrade, stock market inflows rose by 9.5 percent in May, and portfolio investment reached $1.2 billion in the first quarter of 2025, the highest since late 2021.

For too long, African policymakers and development partners have criticised the major rating agencies for overweighting external vulnerabilities and underweighting structural reform and governance quality. These upgrades challenge the prevailing narrative that reform in Africa goes unrewarded. That is a broader point worth pausing on. Nigeria is not just improving its own standing. It is making a case, through results, that African economies can and do respond to serious reform. That matters well beyond its own borders.

Why This Matters Beyond the Numbers

Economic recovery is not just about what appears on a report. It is about the re-establishment of trust.

Investors, both local and international, respond to clarity and consistency. When policies are predictable, when markets are allowed to function without artificial distortions, capital begins to flow again. And capital, when deployed effectively, translates into businesses, jobs, and ultimately, improved livelihoods for ordinary people.

Public debt is expected to decline for the first time in over a decade, from 42.9 to 39.8 percent of GDP. That is a meaningful shift in the fiscal trajectory of a country that had grown accustomed to borrowing its way through structural problems.

At the same time, it is important to acknowledge that recovery is rarely linear. The immediate impact of reforms, especially those that remove long-standing subsidies, is painful. Households feel the pressure, businesses adjust to higher operating costs, and the cost of living rises before it stabilises. History offers several examples of economies that navigated similar transitions. Indonesia and Egypt both undertook subsidy reforms that triggered initial public discomfort but ultimately led to stronger fiscal positions and more sustainable growth trajectories. The lesson is consistent: short-term pain, managed with discipline and clarity, can translate into long-term gain. Nigeria appears to be on that path, though the gains have not yet reached the households that need them most, and that must remain a central concern, not a footnote.

The Bigger Picture: Africa’s Financial Sovereignty

Yet Nigeria’s upgrades also expose a deeper structural problem that reforms alone cannot fix. The Big Three agencies are American institutions applying frameworks shaped by Western market assumptions, and their recognition of African progress consistently lags the reality. A 2023 UNDP study (Atlantic Council) found that African countries could save up to $74.5 billion if credit ratings were based on less subjective assessments, enough to fund 80 percent of the continent’s annual infrastructure needs. 

The case becomes sharper when viewed alongside China’s investment record on the continent. Unburdened by extraterritorial anti-bribery legislation — the US Foreign Corrupt Practices Act, the UK Bribery Act — Chinese firms have moved faster and deeper into African markets. Western companies, constrained by litigation risk at home around commercial conduct, have frequently walked away from viable opportunities. President Trump’s executive order suspending criminal prosecution of American companies under the FCPA is, whatever its domestic critics say, a pragmatic recognition of that competitive reality. If Western firms can now engage African markets on the same commercial terms as their Chinese counterparts, the flow of private capital into the continent could accelerate meaningfully, and with it, the fiscal fundamentals that drive ratings upward. The credit ratings, in other words, would improve not because the methodology changed, but because the underlying conditions genuinely did.

This reframes the entire conversation. Africa’s credit rating problem is not only a measurement problem. It is a participation problem. When the pool of willing investors is artificially narrowed by asymmetric legal exposure, the capital that does flow commands a premium that distorts the picture. Widen the pool, and the premium compresses on its own.

Which is precisely why Africa needs its own credit rating institution, not as a defensive response to Western bias, but as an assertion of financial maturity. An African agency, operating to rigorous independent standards, would not simply give Africa a more favourable reading of itself. It would be credible enough to rate everyone; to assess the sovereign and corporate risk of all partners doing business on the continent, Chinese, Western, and multilateral alike. It would not just give Africa a seat at the table, it would make Africa the table.

Nigeria’s upgrades from Fitch and Moody’s are earned and significant. But they should also be a provocation, a reminder that Africa cannot indefinitely outsource the verdict on its own progress to institutions built for a different world. The continent’s financial sovereignty, like its economic recovery, must ultimately be built from within.

The One Issue That Cannot Be Deferred

While I align firmly with the direction of Nigeria’s economic reform, there is one issue that must be confronted with far greater urgency if this progress is to hold. Security.

Economic reform will not reach its full potential in a country where safety is uncertain because capital does not flow freely into fear. People cannot build confidently in an environment where life and property are constantly at risk. This is not a secondary issue, it is foundational, and the IMF itself has flagged it explicitly, noting that a deterioration of security could directly impact growth and deepen food insecurity.

Addressing it requires both compassion and resolve. On one side, we must deal seriously with root causes, particularly poverty and the absence of structured opportunity. It is no longer acceptable for children to be left outside a functioning educational system. The state must take a firmer position, treating access to quality schooling not as a privilege but as a non-negotiable standard, with investment in public schools, a modernised curriculum, and accountability systems for both students and teachers. This must apply equally across Southern and Northern Nigeria.

But alongside investment, there must be an unmistakable line drawn against violent crime. Kidnapping, terrorism, and murder cannot continue to exist in a system where consequences are negotiable. Upon final conviction, these offences must carry the death penalty without the option of reduced sentencing, negotiation, or fines. The justice system must be clear, consistent, and swift in its response. Anything less sends the wrong signal, not just to offenders, but to every citizen and every investor watching closely.

Ultimately, the story of Nigeria today is not one of perfection but it seems to be going in the right direction.