Tumbling oil prices and a raging Islamist insurgency continue to darken the outlook for Nigeria, prompting Standard & Poor's to cut its rating on the country deeper into junk territory on Friday.

S&P slashed its rating on Nigeria to B+ from BB-, putting the country four notches below investment grade.

As analysts at S&P write:

In our view, the decline in oil prices in the last seven months has significantly affected Nigeria's external position and external vulnerability. We expect that the 2010-2014 surplus on the current account will turn to an average deficit of 1.8% of GDP in 2015-2018

Lower oil prices are expected to drag Nigeria's economic growth to an average of 5 per cent a year over the next three years, down from S&P's previous forecast of an average of 6.2 per cent a year.

In addition to its economic woes, which have contributed to the collapse of the naira against the dollar, the country is also fighting an insurgency led by the militant Islamist group Boko Haram in the northeast. There could be further political turmoil as the country heads toward a contentious presidential election this spring.

S&P said:

We also believe that political risks are significant. The tightly contested general elections may pose risks to Nigeria's external position and the implementation of what we view as the government's ambitious fiscal consolidation plans, while the Boko Haram group continues to disrupt the northeast.