South Africa hit with a double blow

South Africa faces a double blow from domestic political uncertainty and external headwinds, S&P Global Ratings said, adding that it is monitoring whether the country’s coalition government can hold together and sustain the reforms behind last year’s credit rating upgrade.

South Africa’s Constitutional Court cleared the path on Friday for an impeachment hearing into President Cyril Ramaphosa’s conduct in the Phala Phala scandal, after a panel report found he had a case to answer over the theft of $580,000 in cash hidden in a sofa at his farm.

The development puts fresh scrutiny on the coalition government as rising oil prices and borrowing costs add to the pressure on the economy from the Middle East conflict.

S&P’s Samira Mensah, head of analytics and research for Africa, told Reuters S&P is watching “the strength of that coalition, the stability of the coalition to be able to carry on reforms and support the momentum.”

The agency lifted South Africa’s credit rating for the first time in two decades in November, citing the nation’s improving growth and fiscal trajectory.

S&P’s outlook for African sovereign credit was positive at the start of 2026 after two years of ratings improvements, though the Middle East conflict now poses a risk, Mensah said.

More than three-quarters of rated African sovereigns are net importers of fuel and fertilizer, leaving countries such as Egypt, Mozambique and Rwanda most exposed to war-driven price rises, while exporters like Nigeria and Angola are better insulated.

African sovereigns spend on average around 17% of revenues on interest payments, compared to a global median of around 5.5%, leaving little fiscal space to cushion external shocks.

Mensah warned that governments that have recently removed fuel subsidies face political pressure to reverse those reforms the longer the conflict continues.