S&P upgrades Nigeria's credit rating and names Dangote Refinery as a key reason why

S&P Global Ratings upgraded Nigeria's long-term foreign and local currency sovereign credit ratings to B from B-, and in doing so handed Aliko Dangote's refinery one of the most credible external endorsements any African industrial project has ever received from a major rating agency.

The upgrade, announced this week, cited stronger economic growth, improved external balances, rising oil production and expanded domestic refining capacity as the key factors supporting Nigeria's recovery. S&P was specific about the refinery's role. "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.

That sentence, appearing in a sovereign credit rating report from one of the world's three most influential rating agencies, is not a footnote. It is a formal acknowledgment that a single privately built industrial facility has materially shifted the macroeconomic outlook of Africa's largest economy.

S&P projected that Nigeria's current account surplus would improve to 5.8 percent of GDP in 2026 from 4.8 percent in 2025, supported partly by increased domestic refining and hydrocarbon exports. The agency said the refinery is helping ensure the availability of refined fuel, gas and fertiliser for the domestic market while providing a buffer against global supply disruptions from ongoing geopolitical tensions in the Middle East, where Strait of Hormuz instability has pushed up tanker costs across the region.

Nigeria's foreign exchange reserves tell part of the story in numbers. S&P said reserves have risen significantly from approximately $33 billion in 2023 to nearly $50 billion by early 2026. Lower import demand for refined petroleum products, directly linked to the refinery's operational ramp-up, is among the contributors to that improvement. Before the refinery came online, Nigeria was spending several billion dollars annually importing the fuel its own crude produced abroad and shipped back as petrol, diesel and jet fuel. That spending has been slashed, reducing pressure on the naira and on the central bank's dollar reserves simultaneously.

The agency also linked Nigeria's improving position to the reforms undertaken since 2023, including exchange rate liberalisation, fiscal reforms, higher petroleum revenue remittances to government and enhanced oil production security in the Niger Delta. Those reforms created the policy environment that allowed the refinery's commercial impact to flow through to the macroeconomic indicators S&P measures.

S&P disclosed that Dangote Industries has already unveiled plans to conduct feasibility studies on expanding refining capacity to approximately 1.4 million barrels per day from the current 650,000. The agency said that planned expansion, alongside the rehabilitation of Nigeria's other state-owned refineries, could further strengthen the economy and deliver additional balance of payments gains over the next several years.

The stable outlook attached to the B rating reflects a balance between the improving external position and continuing structural challenges: a narrow tax base, high inflation and low formal employment levels. Nigeria is not being called a transformed economy. It is being called a recovering one, and the distinction matters for investors assessing where the country sits on the risk spectrum.

What the S&P report does unambiguously is validate the commercial and macroeconomic thesis that Dangote has been making for years in the face of significant scepticism, legal battles with petroleum marketers and public disputes with the Nigerian National Petroleum Corporation over crude supply. His argument, that a world-scale domestic refinery would reduce import dependence, improve the balance of payments, stabilise fuel supply and strengthen the naira, has now been independently assessed and confirmed by the same agency that scores the creditworthiness of sovereign governments.

The upgrade also arrives at the precise moment Dangote is preparing a refinery IPO targeting a valuation of up to $50 billion, with investor demand already approaching $2 billion ahead of a formal offering on the Nigerian Exchange. S&P's language will feature prominently in that prospectus. Independent sovereign credit upgrade documentation citing a specific private asset as a macroeconomic driver is exactly the kind of third-party validation that institutional investors price into their participation decisions.