S&P says Middle East war to hit African states’ credit ratings

The risk to African economies from the Middle East conflict is likely to worsen if the war drags on, given that many are net importers of oil, fuel and fertilisers, S&P Global said on Wednesday.

In an assessment of the continent’s exposure to the crisis, the ratings agency said higher fuel and fertiliser import costs will increase inflation as well as fiscal and external strains on African sovereigns, potentially leading to rating pressure.

Repercussions of the war are likely to be uneven across the continent, with net importers of energy and those with limited financial resources most affected.

“Many African sovereigns have limited fiscal space to mitigate an external shock, and most net energy importers face higher import expenditure, weaker fiscal and external performance metrics, and potentially, slower economic growth,” S&P said.

Large oil exporters such as Angola, Republic of Congo and Cameroon could benefit from rising export receipts, though their reliance on imported refined fuel could limit these gains. Nigeria might see larger benefits thanks to its increasing domestic refining capacity.

The depth of local capital markets, which provide more diverse financing sources, could offset the pressures, particularly for South Africa, Morocco and Egypt, the ratings agency added.

S&P’s outlook for sovereign credit in Africa was positive at the outset of 2026 following two years of net improvements in regional ratings, but the Middle East conflict has dampened this by raising refinancing costs.

“The rise in the cost of imported energy will weaken most African sovereigns’ regional balances of payments and could intensify the pressure on some sovereigns to reintroduce subsidies they only recently phased out,” it said.

“The second-round effects on inflation will also increase the demand for foreign currency, leading to exchange-rate pressures and higher domestic refinancing costs.”

Rising fertiliser prices can reduce domestic food production and strain African household budgets for a long period, it warned.

Supply chain disruptions could also add to costs through adjustments to trade routes. This affects imports and exports, including exports of gold and diamonds, some of which transit the Middle East.

“Broadly, we expect Africa’s borrowing costs to increase due to all these factors, with global risk aversion, which has been evident in some African sovereigns’ regional currency performance since the conflict began,” S&P said.

On average, rated African countries only import 11% of their goods from the Middle East, mainly refined fuels, but rising international fuel prices and constrained supply are already causing fuel shortages across the continent, as seen in recent disruptions in Ethiopia and Kenya.

Nigeria’s Dangote refinery, the largest in Africa with the capacity to produce 650,000 barrels of oil per day, could alleviate regional pressures but requires additional fuel imports due to domestic supply limitations.

A high reliance on imported sulphur used to manufacture phosphate fertilisers and extract copper, cobalt, nickel and uranium is also likely to affect the continent, which reserves about 40%-45% of sulphur shipments from the Middle East, S&P said.

Earlier this week, the agency’s South Africa head, Samira Mensah, told Business Day that the country was on track to keep its ratings and positive outlook, but this could change by its May 29 update, depending on how the Middle East war affects its economic metrics.

S&P upgraded the country’s rating in November 2025, the first time in two decades, citing stronger-than-expected tax revenue, primary budget surpluses and reduced risks linked to Eskom and other state-owned entities.