Africa will have a $90 billion debt wall by 2026, S&P says
S&P Global Ratings has advised that African governments face increased debt risks as hard-currency repayment schedules in 2026 put pressure on external buffers, contributing to rollover risks.
According to the agency’s most recent African sovereign outlook report, which was released on Monday, government repayments of external debt have increased by more than three times since 2012.
“Structurally high debt and low, concentrated revenue bases will continue to pose key risks and, with government external debt repayments likely to exceed $90 billion this year, external vulnerabilities have also increased,” Benjamin Young of S&P wrote in the report. “Government external debt repayments are approaching a peak.”
Egypt accounts for about one-third of this year’s tally with $27 billion due in principal repayments, followed by Angola, South Africa, and Nigeria.
S&P stated that average sovereign ratings in the region have achieved their highest levels since late 2020, reflecting reform progress and increased GDP. However, according to S&P analysts, it was a sign that important credit measures were stabilizing rather than dramatically improving because structural changes to lower debt loads often required longer timescales.
Easing global financial circumstances and investors eager to diversify their investments have reopened the door for a number of African sovereigns to enter global capital markets.
However, some of countries, such as Republic of Congo, had to give double-digit yields in recent months, largely considered as too expensive for issuers, and a number of governments have turned to off-market arrangements such as private placements or total return swaps.
Economic development is likely to stay steady, with average real GDP growth forecast at 4.5% in 2026, while fiscal deficits are expected to modestly stabilize to 3.5% of GDP. Nevertheless, government debt is likely to be elevated at roughly 61% of GDP on average.
The rising debt redemption load is causing numerous governments to turn to liability management techniques, such as buybacks, swaps, and maturity extensions, to mitigate refinancing risks.
Côte d’Ivoire, Benin, Uganda, the Republic of the Congo, Mozambique, Kenya, and South Africa are notable countries that apply these strategies.
