Nigeria is Sub Saharan Africa’s largest economy and relies heavily on oil as its main source of foreign exchange earnings and government revenues. Following the 2008-09 global financial crises, the banking sector was effectively recapitalized and regulation enhanced. Since then, Nigeria’s economic growth has been driven by growth in agriculture, telecommunications, and services. Economic diversification and strong growth have not translated into a significant decline in poverty levels; over 62% of Nigeria's over 180 million people still live in extreme poverty.

Despite its strong fundamentals, oil-rich Nigeria has been hobbled by inadequate power supply, lack of infrastructure, delays in the passage of legislative reforms, an inefficient property registration system, restrictive trade policies, an inconsistent regulatory environment, a slow and ineffective judicial system, unreliable dispute resolution mechanisms, insecurity, and pervasive corruption. Regulatory constraints and security risks have limited new investment in oil and natural gas, and Nigeria's oil production had been contracting every year since 2012 until a slight rebound in 2017.

Banking sector risk remains CCC-rated. However, the domestic banking sector faces a number of serious challenges. The country's 2016‑17 recession and banks' large exposure to the depressed oil and power sectors have hit banks' financial soundness. Credit risk has been exacerbated by increased loan impairments resulting from the depreciation of the naira in 2016‑17 and the resultant inability of debtors to service hard-currency-denominated loans. Lending denominated in dollars accounts for almost half of banks' loan books, and lending to the oil and gas sector made up more than 30% of gross loans at end-2016.