S&P lifts credit rating outlook for South Africa, Zambia and Nigeria

Credit rating agency S&P Global Ratings has given South Africa, Nigeria and Zambia more favourable assessments. The improved outlooks could lower borrowing costs and support increased investment. Sovereign credit ratings play a crucial role in determining a country’s access to international capital. These ratings inform investors about the risks and opportunities associated with lending to governments, influencing the availability and cost of funding. Institutional investors, such as pension funds and mutual funds, often require investment-grade ratings before including a country’s debt in their portfolios. The designation of a country’s debt as “investment grade” or “speculative” significantly affects the volume of capital it can attract and the interest rates it must pay. A higher credit rating can lead to lower borrowing costs, while a downgrade can make financing prohibitively expensive. Additionally, credit ratings serve as an indirect signal to foreign direct investors evaluating opportunities in emerging markets. This gives them enormous influence in the international financial architecture.

South Africa received its first credit rating upgrade since 2005. S&P increased South Africa’s rating on its long-term foreign currency borrowing to BB from BB-, and upgraded the rating on debt it repays in local currency to BB+ from BB. The new scores remain below investment grade, but BB+ is just one notch short of that level. Western ratings agencies have been criticised for not evaluating African sovereign fairly. The result is that African countries often must pay far more interest on their borrowings than do Asian countries with similar macroeconomic profiles.

S&P said the upgrade is due to signs of a stronger growth and fiscal outlook. S&P expects GDP growth to reach 1.1% in 2025 after a muted 0.5% in 2024, and to average 1.5% between 2026 and 2028.

The South African government is on track to record its third consecutive primary surplus – meaning it brings in more money than it spends before interest payments – in the fiscal year ending March 2026. Revenues are expected to exceed budget projections, supported by stronger-than-expected VAT and corporate income tax collections. Financial risks are also likely to ease as Eskom, the state-owned electricity company, continues its turnaround. The utility has reported its first profit in eight years, suggesting it will need less government support.

S&P noted that broader economic reforms have gained momentum. Alongside improvements in electricity supply after years of load-shedding, the government has begun overhauling the logistics sector. Prolonged dysfunction at Transnet, the state-owned logistics operator, has disrupted freight rail and port operations, hampering mineral and agricultural exports. Reforms are progressing, with 11 private-sector operators shortlisted to assist in managing rail routes.

Despite some internal disputes, the Government of National Unity – the coalition formed after the May 2024 election, in which the African National Congress lost its parliamentary majority – has held together. This cohesion, S&P said, supports expectations of continued policy continuity and reform momentum.

Centre Director Amit Jain with AU Lead Expert for country support on Rating Agencies Dr Misheck Mutize in Nigeria.

Nigeria’s credit profile also saw a shift in sentiment, with the outlook raised to “positive” from “stable,” even though the long-term B- rating for both foreign- and local-currency debt was unchanged. S&P believes the monetary, economic, and fiscal reforms being implemented by the government will yield positive benefits over the medium term. 

Since taking office in May 2023, President Bola Tinubu has ended the previous system of trying to control the currency’s value and introduced a more market-driven regime. He has also scrapped the longstanding fuel subsidy, which had placed a heavy burden on public finances. Ongoing tax collection reforms are expected to strengthen the government’s fiscal position further.

S&P has raised its GDP growth forecast for Nigeria to an average of 3.7% between 2025 and 2028, up from 3.2%, reflecting expectations of higher oil production and improving private-sector confidence. It also said the commissioning of the new Dangote refinery, together with ongoing rehabilitation of other refineries, will help support the country’s economic outlook.

Zambia was also lifted out of selective default and assigned a CCC+/C rating with a stable outlook. This follows a complicated debt restructuring. More than 94% of the US$13.3bn debt it owed to international borrowers has been resolved, allowing the country to formally exit default. With refinancing risks easing and investor confidence stabilising, Zambia has entered a new phase of its post default recovery. Governance reforms and improved fiscal coordination have also improved outlook.

 

References

‘Nigeria outlook revised to positive from stable; 'B-/B' ratings affirmed’, S&P Global, 14 November 2025

‘South Africa’s ratings upgraded by S&P Global’, Moneyweb, 15 November 2025

‘S&P raises Nigeria’s outlook to ‘positive’ as reforms take hold’, Reuters, 15 November 2025 

‘South Africa foreign currency rating raised to 'BB'; local currency rating raised to 'BB+'; outlook positive’, S&P Global, 15 November 2025

‘S&P Global boost for South Africa, Nigeria’, Semafor, 17 November 2025

‘A milestone budget in challenging times’, Deloitte, Accessed on 24 November 2025