Economic reforms and improved growth have lifted African sovereign credit ratings to their highest level in over five years, and the outlook remains positive, according to S&P Global Ratings.
Financing costs for many African countries could ease on the back of stable economies, moderating inflation, firmer commodity prices and stronger local currencies, S&P said.
“Lower inflation should temper local-currency funding costs for many governments and create a more conducive environment for the implementation of revenue-raising reforms,” analysts including Benjamin Young wrote in a report this week.
Principal external debt repayments for rated African sovereigns are estimated at about $90 billion in 2026, the company said. Repayments are nearing a peak and are more than three times larger than in 2012. Nearly one-third of those are owed by Egypt, which faces about $27 billion in repayments this year, the largest burden among rated sovereigns. Angola, South Africa and Nigeria are also among the biggest debtors.
Egypt’s interest payments as a share of revenue remain among the highest of rated sovereigns, S&P said. The firm expects Egypt’s inflation to ease this year, helping lower government borrowing costs. The country is liberalizing its foreign-exchange regime and a firmer growth outlook along with improving external accounts underpinned a sovereign upgrade in October. S&P expects the country to sustain the positive rating momentum.
Narrower deficits
Average real annual economic growth across rated African sovereigns is likely to remain around 4.5%, with fiscal outcomes broadly stable. Deficits are projected to narrow modestly to an average of 3.5% of gross domestic product in 2026 from 3.7% in 2025, as countries benefit from strong but uneven growth across the continent. The ratings company expects average government debt to remain stable at about 61% of GDP.
Strong prices for commodities such as gold and copper should support fiscal and external revenue in countries including South Africa, Zambia, Guinea, Uganda, Ethiopia, the Democratic Republic of Congo, Ghana and Rwanda.
In South Africa, risks from state-owned utilities, particularly Eskom, are expected to recede, though Transnet will continue to require support, S&P said. The country’s large and sophisticated domestic financial system is expected to continue to provide a deep funding base for the government.
S&P said it may upgrade South Africa if fiscal imbalances shrink more than expected, supported by a stronger track record of steps that boost growth and reduce contingent liabilities.
The ratings firm cautioned that there are risks to its generally positive outlook for the continent.
A more fragmented global environment, marked by shifting trade relationships and political alliances, could increase uncertainty around global growth and introduce greater volatility in commodity demand, S&P said. Such uncertainty could complicate fiscal planning and reduce predictability, the firm said.
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