By Seyi Odewale
The S&P Global Ratings has projected a stronger outlook for Nigeria’s economy, citing the growing impact of the Dangote Petroleum Refinery & Petrochemicals and ongoing economic reforms as key drivers of recovery and macroeconomic stability.
In its latest sovereign assessment, S&P upgraded Nigeria’s long-term foreign and local currency sovereign credit ratings from “B-” to “B”, pointing to stronger economic growth, improved external balances, rising crude oil production and expanding domestic refining capacity.
The global ratings agency identified the operational ramp-up of the 650,000 barrels-per-day Dangote refinery as a major factor strengthening Nigeria’s balance of payments position and reducing pressure on foreign exchange demand.
“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.
According to S&P, the refinery’s near-full-capacity operations are helping Nigeria reduce its dependence on imported petroleum products, improve foreign-exchange liquidity, and sustain a stronger current account surplus.
The agency projected that Nigeria’s current account surplus would rise to 5.8 per cent of GDP in 2026 from 4.8 per cent in 2025, driven partly by increased domestic refining activities and hydrocarbon exports.
S&P noted that the refinery is improving the supply of refined fuel, gas and fertiliser within the domestic market while also helping Nigeria withstand global supply disruptions triggered by geopolitical tensions in the Middle East.
The report linked Nigeria’s improving external position to reduced fuel import dependence, the removal of fuel subsidies, exchange rate liberalisation, and higher oil production.
Foreign exchange reserves, according to the agency, rose from about $33 billion in 2023 to nearly $50 billion by early 2026, supported partly by declining import demand for refined petroleum products following the commencement of operations at the Dangote refinery.
S&P further stated that Nigeria is transitioning from being primarily a crude oil exporter to an emerging producer and exporter of refined petroleum products, strengthening Africa’s industrialisation ambitions.
The agency disclosed that Dangote Industries has unveiled plans to conduct feasibility studies to expand refining capacity from the current 650,000 barrels per day to about 1.4 million barrels per day.
According to the report, the planned expansion, alongside the rehabilitation of other local refineries, could further strengthen Nigeria’s economy and improve the country’s balance of payments position over the next few years.
While acknowledging that global crude oil prices and market-driven pricing would continue to affect domestic fuel costs, S&P maintained that increased local refining capacity has improved Nigeria’s energy security and reduced exposure to external supply shocks.
The report also tied Nigeria’s improving macroeconomic outlook to reforms introduced since 2023, including exchange rate liberalisation, fiscal adjustments, higher petroleum revenue remittances and efforts to improve oil production through enhanced security in the Niger Delta.
S&P said Nigeria’s growth outlook would remain positive despite persistent inflationary pressures, with reforms expected to sustain investor confidence and support expansion in the non-oil sector.
The stable outlook, according to the agency, reflects a balance between Nigeria’s improving external position and ongoing structural challenges, including a narrow tax base, high inflation, and low levels of formal employment.
