During S&P Global’s emerging market conference in London, one of the firm’s top sovereign rating analysts, Frank Gill, highlighted the positive economic policy developments in Nigeria and Kenya. Gill also, however, expressed concerns about South Africa’s slow-moving credit story and the steady rise in its debt-to-GDP ratio.
Regarding Nigeria, Gill emphasised that S&P is closely monitoring the country, and despite being on a negative outlook, he acknowledged some encouraging signs. Notably, the government’s recent measures to cut fuel subsidies and simplify the country’s foreign exchange rates have been instrumental in attracting attention. In February, the agency had affirmed Nigeria’s credit rating at “B-/B” but issued a “negative” outlook, citing increasing risks over its debt servicing capacity.
Shifting the focus to Kenya, Gill highlighted positive developments in the country. Kenya’s government successfully pre-financed a redemption due in 2024 through a syndicated loan and funds from multilateral institutions. S&P expressed confidence that Kenya is unlikely to restructure its debt, signalling stability in its economic outlook.
In contrast, caution was expressed by Gill over South Africa’s credit story. Although he did not anticipate an immediate downgrade, he projected concerns regarding the country’s long-term prospects. S&P downgraded South Africa’s outlook from “positive” to “stable” in March, citing infrastructure constraints and a severe power crisis. However, the country’s ‘BB-/B’ foreign currency sovereign credit rating was maintained.
The analysis by S&P Global underlines the importance of economic policy developments and debt management in shaping the ratings and outlooks of these African economies. Nigeria’s efforts to address fiscal challenges and unify exchange rates, as well as Kenya’s proactive approach to debt repayment, have garnered positive attention. Conversely, South Africa’s slow progress and rising debt levels raise long-term concerns.
As the global economic landscape evolves, these assessments serve as valuable indicators for investors and policymakers alike. Monitoring the trajectory of these African economies will be crucial in understanding their resilience and potential for sustainable growth in the years ahead.