Lagos: The National Institute of Credit Administration (NICA) has expressed optimism that Nigeria’s recent reclassification by FTSE Russell and the positive outlook from Moody’s could bolster capital inflows and improve access to credit for businesses.
According to News Agency of Nigeria, Moody’s Ratings revised Nigeria’s sovereign outlook from stable to positive while maintaining its B3 rating. The rating agency highlighted stronger economic growth, improved foreign exchange reserves, and a more resilient external position as key factors, despite ongoing fiscal and debt affordability challenges. Additionally, FTSE Russell’s reclassification of Nigeria to Frontier Market status is expected to enhance the visibility of Nigerian equities in global indices and potentially attract more foreign portfolio investment.
Prof. Chris Onalo, NICA’s Registrar and Chief Executive Officer, emphasized that these developments could be structural positives for Nigeria’s credit economy if they are supported by robust credit infrastructure and consistent economic policies. He noted that increased foreign investment could strengthen banks’ capital and deposit bases, enabling them to expand lending to the real sector. Furthermore, greater market visibility might attract private equity, venture capital, and credit funds, creating alternative financing channels for small and medium enterprises (SMEs).
Onalo pointed out that improved investor scrutiny would encourage SMEs to improve their financial reporting, credit management, and professional practices, thereby making more businesses ‘credit visible’ and bankable. He also mentioned that increased foreign exchange inflows could support exchange rate stability, reduce imported input costs, and improve manufacturers’ cash flows and debt servicing capacity.
Regarding Moody’s decision to retain Nigeria’s B3 rating while revising its outlook to positive, Onalo described it as a confidence signal rather than an immediate reduction in borrowing costs. He indicated that an improved sovereign risk perception could gradually lower Nigeria’s borrowing costs, encouraging international banks and development finance institutions to extend credit lines and trade finance to Nigerian banks. However, he noted that any significant reduction in household lending rates would depend on sustained moderation in inflation and lower default risks.
To maximize these benefits, Onalo urged the Federal Government and regulators to strengthen credit reporting, operationalize the National Collateral Registry, and professionalize credit administration. He also called for enhanced debt recovery mechanisms and expanded credit guarantee schemes for manufacturing, agriculture, and housing. Moreover, he advocated for the development of the corporate bond market to provide businesses with alternative sources of long-term financing. Onalo stressed the importance of continuing exchange rate reforms, controlling inflation, and reducing domestic borrowing to create more space for private sector credit.
“FTSE and Moody’s have opened the door. But the destination is a deep, inclusive, and professional credit market,” Onalo stated, adding that NICA is prepared to collaborate with the Central Bank of Nigeria, Ministry of Finance, Securities and Exchange Commission, and the organized private sector to build a stronger credit economy.