Africa Faces $90 Billion Debt Wall, S&P Reports

S&P Global Warns of Mounting African Sovereign Debt

S&P Global Ratings has issued a caution regarding rising debt risks for African governments, with external debt repayments projected to exceed $90 billion this year. This surge represents a more than threefold increase since 2012 and elevates external vulnerabilities and rollover risks for the region.

Debt Repayment Landscape

The report highlights that Egypt leads the repayments with $27 billion due, followed by Angola, South Africa, and Nigeria. Despite improved sovereign ratings reflecting reform momentum, S&P notes these metrics signal stabilization rather than significant improvement, as government debt is expected to remain high at around 61% of GDP.

Market Access and Management Strategies

While some nations have regained access to global capital markets, it often comes at a high cost with double-digit yields. In response, countries like Kenya, Côte d’Ivoire, and South Africa are employing liability management strategies, including buybacks and maturity extensions, to mitigate refinancing risks.

Outlook

Economic growth is forecast to be steady at 4.5% in 2026. However, the structurally high debt burden remains a primary risk factor for the continent's economic stability, demanding careful fiscal management and strategic debt restructuring.

FAQ

Q: Which country has the largest debt repayment this year?
A: Egypt accounts for the largest portion, with $27 billion in principal repayments due.

Q: What is the main risk highlighted by S&P?
A: The main risk is increased external vulnerability and rollover risk due to a peak in government external debt repayments.

Source: Investing.com