A leading global ratings agency, S&P Global Ratings, has projected that African sovereign could reach 45% of the continent’s gross domestic product (GDP) by the end of 2026 on sustained borrowings by governments in the continent,
In its just released non-rating note, the agency estimated that commercial long-term borrowing by rated African sovereigns would hit $155 billion in 2026, up from $140 billion in 2025 and attributed the projected increase to maturing debt obligations and ongoing fiscal financing needs.
Analysts in the firm forecasted that total outstanding African sovereign commercial debt would exceed $1.2 trillion, constituting 45% of GDP (including short-term debt) by the end of 2026.
They noted that although borrowing needs and costs vary across the continent but estimated that the annual median borrowing for the 27 rated issuers is approximately $1.5 billion in absolute terms, noting that the amount is significantly lower than that of global peers.
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The experts partly attributed this disparity to the smaller size of many African economies and the greater reliance on concessional (non-commercial) financing in their debt profiles.
Similarly, S&P further noted that the relatively low dollar amounts of African sovereign debt reflected the high average cost of commercial borrowing for African governments and that their narrower, more specialised investor base typically included smaller domestic banks and non-bank financial sectors.
The S&P Global Ratings report highlighted that the requirements for rolling over debt and the associated costs diverge significantly, often accounting for a larger share of GDP and fiscal revenues than the global average.
The ratings agency reported that three larger issuers, namely Egypt, Morocco, and South Africa, dominated the region due to their more substantial economies, more developed financial systems, and long-standing access to markets.
However, it cautioned that the ongoing Middle East conflict and its impacts on supply chains and hydrocarbon prices, presented risks to Africa’s borrowing plans for 2026.
S&P further clarified: “We expect the war and its implications for hydrocarbon shipping lanes, particularly the Strait of Hormuz, will begin to stabilise in the coming weeks. However, if the conflict persists beyond that, it could negatively affect fiscal positions, inflation rates, and financing plans across Africa.”
The S&P Global Ratings findings showed that since most African countries rely heavily on refined fuel imports, rising prices could put additional pressure on the national governments, particularly if their central banks further raise policy rates to curb inflation.
Specifically, S&P projected that budget deficits could widen in Angola and Egypt, which provide substantial fuel subsidies but that favourable external financing costs, currently at multi-year lows, offer some relief, enabling governments to refinance upcoming foreign currency maturities at lower expenses.
