Economy
Fitch Downgrades South Africa to ‘BB+’
By Modupe Gbadeyanka
South Africa’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) has been downgraded to ‘BB+’ from ‘BBB-‘ by Fitch Ratings with the outlooks stable.
The issue ratings on South Africa’s senior unsecured foreign- and local-currency bonds have been downgraded to ‘BB+’ from ‘BBB-‘.
The rating on the sukuk trust certificates issued by RSA Sukuk No. 1 Trust has also been downgraded to ‘BB+’ from ‘BBB-‘, in line with South Africa’s Long-Term Foreign-Currency IDR.
The Short-Term Foreign-and Local-Currency IDRs and the rating on the short-term local-currency securities have been downgraded to ‘B’ from ‘F3’. The Country Ceiling has been revised down to ‘BBB-‘ from ‘BBB’.
The downgrade of South Africa’s Long-Term IDRs reflects Fitch’s view that recent political events, including a major cabinet reshuffle, will weaken standards of governance and public finances.
In Fitch’s view, the cabinet reshuffle, which involved the replacement of the finance minister, Pravin Gordhan, and the deputy finance minister, Mcebisi Jonas, is likely to result in a change in the direction of economic policy.
The reshuffle partly reflected efforts by the out-going finance minister to improve the governance of state-owned enterprises (SOEs). The reshuffle is likely to undermine, if not reverse, progress in SOE governance, raising the risk that SOE debt could migrate onto the government’s balance sheet.
Differences over the country’s expensive nuclear programme preceded the dismissal of a previous finance minister, Nhlanhla Nene, in December 2015 and in Fitch’s view may have also contributed to the decision for the recent reshuffle.
Under the new cabinet, including a new energy minister, the programme is likely to move relatively quickly.
The state-owned electricity company, Eskom, has already issued a request for information for nuclear suppliers and is expected to issue a request for proposals for nuclear power stations later this year.
The treasury under its previous leadership had said that Eskom could not absorb the nuclear programme with its current approved guarantees, so the treasury will likely have to substantially increase guarantees to Eskom.
This would increase contingent liabilities, which are already sizeable. According to the 2017/18 budget, the government’s guarantee exposure to public institutions was ZAR308.3 billion at end-March 2017, up from ZAR255.8 billion a year earlier.
The main SOEs had additional liabilities of ZAR463 billion in 2016 with no explicit guarantee but with a significant probability that the government would step in should SOEs be unable to service the debt.
The government has repeatedly needed to support SOEs, including Eskom, which is responsible for a large share of liabilities.
The new finance minister has stated that he does not intend to change fiscal policy and remains committed to expenditure ceilings that have been a pillar of fiscal consolidation.
However, Fitch believes that following the government reshuffle, fiscal consolidation will be less of a priority given the president’s focus on “radical socioeconomic transformation”. This means that renewed shortfalls in revenues, for example as a result of lower than expected GDP growth, are less likely to be compensated by expenditure and revenue measures.
This could put upward pressure on general government debt, which at an estimated 53 percent of GDP at end-March 2017 was already slightly above the ‘BB’ category median of 51 percent.
The tensions within the ANC will mean that political energy will be absorbed by efforts to maintain party unity and fend off leadership challenges and to placate rising social pressures for addressing inequality, poverty and weak public service delivery. The Treasury’s ability to withstand departmental demands for increased spending may also weaken.
Political uncertainty was already an important factor behind weak growth last year, as in Fitch’s assessment it has affected the willingness of companies to invest.
The agency believes that the cabinet reshuffle will further undermine the investment climate.
Fitch forecasts GDP growth of 1.2 percent in 2017 and 2.1 percent in 2018, but the reshuffle has raised downside risks.
The current account deficit narrowed to 3.3 percent of GDP in 2016 from 4.4 percent in 2015, on the back of import compression reflecting weak domestic demand, low oil prices and increasing investment income from abroad.
This improvement, together with the flexible exchange rate, will contain pressures should external financing dry up. The government’s low reliance on foreign-currency financing, which accounted for just 11.3 percent of debt at end-March 2017, is also helping to contain external pressures.
Most indicators of economic development are in line with ‘BB’ category medians. GDP per capita at market prices is estimated at USD5,207 for 2016, compared with a median of USD5,007.
The World Bank’s governance indicator, at the 59th percentile, is well above the ‘BB’ median and more in line with the ‘BBB’ median.
However, this may not adequately reflect governance issues that were highlighted in the recent state of capture report by the public prosecutor and governance may deteriorate as a result of the reshuffle.
The rating is supported by a sound banking sector, which has a Fitch Bank Systemic Risk Indicator of ‘bbb’.
By Adedapo Adesanya
The National Insurance Commission has issued new guidelines for the collection, management, and administration of the Insurance Policyholders’ Protection Fund.
In a circular issued to all insurance institutions on Tuesday, the regulator also set May 31, 2026, as the deadline for insurers to submit their assessment returns for the 2025 financial year.
Recall that on August 5, 2025, President Bola Tinubu signed into law the Nigerian Insurance Industry Reform Act ( NIIRA 2025).
This landmark legislation repeals the Insurance Act 2003, and consolidates related provisions, ushering in a modern regulatory framework. It lays a strong foundation for sustainable growth and increased investment in the country’s insurance sector.
The commission said the guidelines were issued in exercise of its powers under the 2025 Act and other existing insurance laws and regulations to provide regulatory clarity, improve guidance, and ensure ease of compliance across the industry.
According to NAICOM, the guidelines establish a comprehensive structure for the operation of the IPPF, which serves as a statutory safety net to protect insurance policyholders in the event of distress or insolvency of a licensed insurer or reinsurer. The framework also provides direction on the reimbursement of loans by insurers and reinsurers.
NAICOM stated, “The guidelines ensure regulatory clarity, guidance and ease of compliance, as it provides a comprehensive regulatory framework for the collection, management, and administration of the Fund, which serves as a statutory safety net designed to protect insurance policyholders against distress and insolvency of a licensed insurer or reinsurer, including guidance for the reimbursement of loans by an insurer or reinsurer.
“Please be informed that the IPPF Assessment Returns in respect of the year 2025 shall be submitted to the Commission not later than 31st May 2026, while subsequent submissions shall be in line with Section 4.3 of the Guideline on Insurance Policyholders Protection Fund.”
By Adedapo Adesanya
The Dangote Refinery on Wednesday returned the petrol price to N1,200 per litre, less than 24 hours after it increased it by 5 per cent.
The private refinery had raised the ex-depot price by N75 on Tuesday, citing pressure from volatile global oil markets, but quickly brought it back to N1,200 per litre from N1,275 per litre.
The swift downward review is directly linked to a sharp drop in international crude prices. Brent crude has plunged to $95.05 per barrel, after a 13 per cent decline, while the US West Texas Intermediate (WTI) crude closed at $97.18, recording nearly a 14 per cent drop.
This development comes after US President Donald Trump announced a conditional two-week ceasefire with Iran, which eased fears of immediate supply disruptions in the global oil market.
“This will be a double-sided CEASEFIRE!” Trump said on social media, marking a sharp reversal from his earlier warning that “a whole civilisation will die tonight” if Iran failed to comply with US demands.
Iran’s Foreign Minister, Mr Abbas Araqchi, confirmed that the country would halt attacks provided strikes against Iran cease and transit through the Strait of Hormuz is coordinated by Iranian forces.
Despite the breakthrough, tensions remain elevated across the region, with several Gulf states reporting missile launches, drone activity, or issuing civil defence warnings.
While oil prices have fallen back below $100, they remain significantly elevated after surging by a record amount in March. Market analysts noted that regardless of how successful the ceasefire is, geopolitical risk related to the Strait of Hormuz is likely to remain elevated for the foreseeable future under the control of Iran.
By Adedapo Adesanya
Crude oil deliveries from the Nigerian National Petroleum Company (NNPC) Limited to the Dangote Petroleum Refinery doubled in March, boosting prospects for improved fuel availability.
This was revealed by the chief executive of Dangote Industries Limited, Mr Aliko Dangote, on Tuesday, when he received the Deputy Secretary-General of the United Nations, Mrs Amina Mohammed, at the industrial complex in Ibeju-Lekki, Lagos.
While speaking on feedstock supply, Mr Dangote commended the NNPC for increasing crude deliveries to the refinery in March, noting that volumes rose to 10 cargoes—six supplied in Naira and four in Dollars—to support domestic fuel availability, according to a statement by the Refinery.
“Last month, they gave us six cargoes for Naira and four cargoes for Dollars,” he said.
Despite the improvement, Mr Dangote noted that the supply remains below the 19 cargoes required for optimal operations, with the refinery continuing to bridge the gap through imports from the United States and other African producers.
He also expressed concern over the unwillingness of international oil companies operating in Nigeria to sell to the refinery, stating that their preference for selling crude to traders forces it to repurchase at higher costs, with broader implications for the economy.
Mr Dangote added that the refinery is seeking increased access to domestically priced crude under local currency arrangements as part of efforts to moderate fuel costs and enhance long-term energy and food security across the continent.
On her part, Mrs Mohammed underscored the strategic importance of Dangote Industries Limited -particularly Dangote Fertiliser Limited—in addressing Africa’s mounting food security challenges, while calling for stronger global partnerships to scale its impact.
Mrs Mohammed said the United Nations would prioritise amplifying scalable solutions capable of mitigating the continent’s food crisis, describing Dangote’s integrated industrial model as a critical pathway.
“I think the UN’s job here is to amplify and to put visibility on the possibilities of mitigating a food security crisis, and this is one of them,” she said. “I hope that when we go back, we can continue to engage partners and countries that should collaborate with Dangote Industries.”
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