The Africa Finance Corporation has retained its AAAspc issuer credit rating with a stable outlook amid Nigeria’s ongoing reform push and gradual recovery in oil production.
This is according to a new report by S&P Global (China) Ratings seen by Nairametrics.
The rating reflects AFC’s strong liquidity position, high policy importance, and sound capital management, although the agency noted that concentrated shareholding remains a governance-related risk.
Nigeria, Africa’s most populous country and a major hydrocarbon exporter, remains an important part of AFC’s exposure.
What they are saying
According to S&P Global (China) Ratings, AFC has a very solid liquidity buffer that supports its operations even under adverse market and economic conditions. The report also noted that the corporation’s concentrated shareholder structure continues to elevate agency-risk considerations.
- “The AFC features very high policy importance, sound capital management and ample liquidity. Its long-term issuer credit rating remains unchanged compared with the previous rating review.”
- “The stable outlook reflects our expectation that AFC’s credit profile will remain unchanged over the next two years.”
The report stated that Nigeria’s reforms and improving oil output have helped strengthen external balances and fiscal health, supporting the broader credit environment.
While hydrocarbons account for nearly 90% of current account receipts and more than a third of government revenue, structural impediments continue to limit production growth.
- “The hydrocarbon sector is a key pillar of the economy, but a significant increase in production is unlikely. Hydrocarbons provide close to 90% of current account receipts, an important source of dollars to the import dependent country, and more than one third of the government’s fiscal revenue. Despite this importance, structural impediments will keep crude and condensate production from growing significantly through 2027.”
More insights
Nigeria remains central to AFC’s exposure, given its position as Africa’s largest population centre and one of the continent’s major hydrocarbon exporters. While oil and gas remain critical to government revenue and foreign exchange inflows, structural constraints continue to limit the pace of production growth.
- Crude oil output improved to 1.60 million barrels per day in 2025, up from 1.38 million barrels per day in 2022.
- The recovery was supported by improved security surveillance and fresh investments in the sector.
- Reforms introduced since mid-2023 include exchange rate liberalisation, fiscal consolidation and stronger tax collection.
S&P said these measures have helped strengthen Nigeria’s external balances and fiscal health.
S&P Global Ratings projects Nigeria’s real GDP growth at 3.9% in 2025, with growth in early second quarter 2025 expected to reach 4.2%, driven mainly by the oil sector.
Growth expectation
S&P Global Ratings expects Nigeria’s GDP growth to average 3.7% annually between 2025 and 2028, supported by a combination of oil and non-oil sector activity. However, the report noted that this growth rate is less than one percentage point above population growth, meaning GDP per capita growth is expected to remain modest.
- The report said growth potential in 2025 and 2026 may be constrained by tight monetary and fiscal policy.
- Tax reform initiatives may also weigh on near-term growth.
- AFC’s non-performing loans fell to 0.82% in 2025.
- The corporation’s reserve coverage ratio rose sharply to 595%.
For AFC, the rating reflects strong fundamentals, including a liquidity buffer that supports resilience in difficult market conditions, as well as good asset quality backed by credit protection measures.
What you should know
S&P Global (China) Ratings expects AFC’s credit profile to remain stable over the next two years.
- However, the agency said a downgrade could occur if AFC’s policy importance weakens, liquidity buffers decline, or leverage rises significantly.
- Continued fiscal discipline and oil sector stabilisation in Nigeria could further support AFC’s standing as a major development finance institution.
According to AFC’s State of Africa’s Infrastructure Report, Africa’s institutional capital pool grew by 25% to more than $2 trillion in 2025, but much of this capital remains underutilised in infrastructure financing, limiting the continent’s ability to fund projects that support job creation and long-term growth.
