S&P Global Ratings said it is closely monitoring political stability in South Africa and growing risks from the Middle East conflict, warning that both could weigh on the country’s reform momentum and the broader outlook for African sovereign credit.
South Africa faces increasing domestic uncertainty after the country’s Constitutional Court on Friday cleared the way for impeachment proceedings linked to the Phala Phala scandal involving President Cyril Ramaphosa.
The case centres on the theft of about US$580,000 in cash allegedly concealed in a sofa at Ramaphosa’s Phala Phala farm, a controversy that has intensified pressure on the coalition government formed after last year’s elections.
The political uncertainty comes as African economies grapple with rising oil prices, elevated borrowing costs and supply disruptions linked to the escalating conflict in the Middle East.
“We are watching the strength of that coalition, the stability of the coalition to be able to carry on reforms and support the momentum,” Samira Mensah told Reuters.
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S&P upgraded South Africa’s sovereign credit rating in November for the first time in two decades, citing improvements in economic growth prospects and fiscal management. The agency had previously pointed to reform efforts aimed at stabilising public finances, improving electricity supply and boosting investor confidence.
However, the ratings agency said sustaining those gains would depend heavily on political stability and continued implementation of reforms.
S&P said Africa’s sovereign credit outlook had entered 2026 on a relatively positive footing after two years marked by several ratings improvements across the continent.
That outlook is now under threat from the Middle East conflict, which has triggered concerns about higher energy and fertiliser prices, inflationary pressures and weaker fiscal balances for many African economies.
According to Mensah, more than three-quarters of rated African sovereigns are net importers of fuel and fertiliser, making them especially vulnerable to prolonged geopolitical instability and commodity price shocks.
Countries including Egypt, Mozambique and Rwanda are among the most exposed because of their dependence on imported energy and agricultural inputs.
Oil-producing nations such as Nigeria and Angola are considered relatively better insulated, as higher crude prices could support export revenues and government income.
Still, S&P warned that African governments generally have limited fiscal room to absorb additional shocks.
The agency said African sovereigns spend an average of about 17% of government revenues on interest payments, compared with a global median of roughly 5.5%.
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The high debt-servicing burden leaves many governments with little capacity to increase spending or introduce support measures if the conflict drags on and commodity prices continue rising.
Mensah also cautioned that governments that recently removed fuel subsidies as part of fiscal reforms could come under mounting political pressure to reverse those measures if energy prices remain elevated.
Several African countries, including Nigeria, have implemented painful subsidy reforms in recent years to reduce budget deficits and secure international financial support.
But rising fuel costs have contributed to public frustration, inflation and social pressure in many economies already struggling with high unemployment and weak household incomes.
Analysts say a prolonged Middle East conflict could complicate economic recovery efforts across Africa, especially for import-dependent countries facing already strained public finances and limited access to affordable external borrowing.
For South Africa, the added uncertainty surrounding the coalition government could further test investor confidence at a time when authorities are trying to maintain reform momentum and support economic growth.
