S&P Links Nigeria’s Economic Recovery to Dangote Refinery, Reforms

S&P Links Nigeria’s Economic Recovery to Dangote Refinery, Reforms

Nigeria’s improving economic outlook has received a major boost as global ratings agency S&P Global Ratings upgraded the country’s sovereign credit rating, citing the operational impact of the Dangote Petroleum Refinery & Petrochemicals and ongoing economic reforms.

In its latest assessment, S&P raised Nigeria’s long-term foreign and local currency sovereign credit ratings to “B” from “B-”, pointing to stronger economic growth, improved external balances, increased oil production, and expanded domestic refining capacity as major drivers of the recovery.

The agency highlighted the 650,000 barrels-per-day Dangote Refinery as a significant contributor to Nigeria’s strengthening balance of payments position and broader macroeconomic resilience.

According to the report, the refinery’s near full-capacity operations are helping to reduce Nigeria’s dependence on imported refined petroleum products, improve foreign exchange liquidity, and support the country’s current account surplus.

“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,” S&P stated.

The ratings agency projected that Nigeria’s current account surplus would rise to 5.8 per cent of Gross Domestic Product (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 also improving the availability of refined fuel, gas, and fertiliser in the domestic market while providing protection against global supply disruptions linked to geopolitical tensions in the Middle East.

The report added that Nigeria’s improving external position has been supported by reduced fuel import dependence, fuel subsidy removal, exchange rate liberalisation, and increased oil production.

According to S&P, Nigeria’s foreign exchange reserves have grown significantly from approximately $33 billion in 2023 to nearly $50 billion by early 2026, aided partly by lower import demand for petroleum products following the commencement of operations at the Dangote Refinery.

The agency further observed that the refinery is supporting Africa’s industrialisation drive by positioning Nigeria as an emerging exporter of refined petroleum products rather than merely a crude oil exporter.

S&P also disclosed that Dangote Industries has unveiled plans to conduct feasibility studies aimed at expanding refining capacity from the current 650,000 barrels per day to about 1.4 million barrels per day.

The report stated that the proposed expansion, alongside ongoing rehabilitation of other local refineries, could further strengthen Nigeria’s economy and improve the country’s balance of payments position in the coming years.

While acknowledging the impact of global crude oil prices and market-driven pricing on domestic fuel costs, S&P maintained that increased local refining capacity would enhance Nigeria’s energy security and reduce exposure to external supply shocks.

The agency linked Nigeria’s improving macroeconomic outlook to reforms introduced since 2023, including exchange rate liberalisation, fiscal reforms, improved petroleum revenue remittances, and enhanced security measures aimed at boosting oil production in the Niger Delta.

S&P added that Nigeria’s economic growth is expected to remain stable despite inflationary pressures, with reforms continuing to support investor confidence and expansion in the non-oil sector.

According to the agency, the stable outlook reflects a balance between Nigeria’s improving external position and persistent structural challenges such as a narrow tax base, high inflation, and low formal employment levels.