By Peace Udugba
Global ratings agency S&P Global Ratings has linked Nigeria’s improving economic outlook to major structural reforms and the operational impact of the Dangote Petroleum Refinery & Petrochemicals.
In its latest review, S&P upgraded Nigeria’s long-term foreign and local currency sovereign credit ratings to “B” from “B-”, citing stronger economic growth, improved external balances, rising oil production, and increased domestic refining capacity.
A key highlight of the report was the role of the 650,000 barrels-per-day Dangote Petroleum Refinery, which S&P described as a major driver of Nigeria’s strengthening balance of payments position and overall economic resilience.
According to the agency, the refinery’s ramp-up to near full capacity is helping to reduce Nigeria’s dependence on imported refined petroleum products, improve foreign exchange liquidity, and support a stronger current account position.
“Significant refining capacity is now also online; Dangote Industries Ltd.’s large-scale refinery and petrochemical complex has ramped up to near its maximum capacity of 650,000 barrels per day,” the report stated.
S&P projected that Nigeria’s current account surplus would rise to 5.8 per cent of GDP in 2026, up from 4.8 per cent in 2025, supported in part by increased domestic refining and hydrocarbon exports.
The report further noted that the refinery is improving domestic supply of refined fuel, gas, and fertiliser, while also reducing Nigeria’s exposure to global supply disruptions linked to geopolitical tensions.
S&P added that Nigeria’s external position has also benefited from fuel subsidy removal, exchange rate liberalisation, higher oil production, and reduced import demand for refined petroleum products.
Foreign exchange reserves were estimated to have increased from about $33 billion in 2023 to nearly $50 billion by early 2026, supported by improved inflows and lower import pressure.
The agency also observed that Nigeria is gradually transitioning from a crude oil exporter to a more diversified energy economy with growing capacity for refined product exports.
It noted that Dangote Industries has outlined plans to explore expanding refining capacity to about 1.4 million barrels per day, subject to feasibility studies and market conditions.
S&P said such expansion, alongside rehabilitation of existing local refineries, could further strengthen Nigeria’s external position and support long-term economic stability.
While acknowledging that global crude oil price volatility and domestic pricing dynamics remain challenges, the report stressed that increased local refining capacity provides Nigeria with greater energy security and reduced vulnerability to external shocks.
S&P also linked Nigeria’s broader macroeconomic improvement to ongoing reforms since 2023, including fiscal adjustments, improved oil revenue remittances, exchange rate reforms, and enhanced security in oil-producing regions.
The agency projected steady economic growth, noting that reforms continue to support investor confidence and expansion in the non-oil sector.
It concluded that Nigeria’s stable outlook reflects a balance between improving external fundamentals and persistent structural challenges, including a narrow tax base, high inflation, and low formal employment.
