At the beginning of February, Standard & Poor’s, the well-known rating agency, released a document (African Sovereign Ratings Outlook 2026: Positive Momentum Stabilizing) on the current economic/financial situation in Africa, analyzed through the typical lens of the rating agency itself.
Africa is an inevitable subject of interest for our country in many respects, and reading the Standard & Poor’s report prompts some brief reflections on the situation on the continent.
Financial trends on the continent
The tone of the S&P document is essentially positive, but this perception must be viewed in the context of an overall situation characterized by numerous critical issues.
From a financial perspective, Africa is included among the so-called emerging markets, which have recently seen increased interest mainly due to the outflow of capital from the United States amid growing concerns about US big tech companies. The latter, riding the wave of artificial intelligence, have raised huge sums of money and led the stock market rally that has brought much satisfaction to investors. However, concerns have recently grown about the concentration of risk on a few very large names, and operators have sought to diversify risk by focusing mainly on private assets, i.e., unlisted assets, and smaller listed companies.
In this context, emerging markets, a term that encompasses very different countries, have become more attractive than in the past. Africa and the Middle East are of limited relevance in the financial sphere, considering that they account for only about 1.27% of the MSCI All Country World Index
With specific reference to Africa, S&P attributes a positive bias to the outlook for early 2026, albeit to a lesser extent than at the beginning of 2025. Specifically, improved growth prospects and certain reforms have led to seven sovereign upgrades in Africa in 2025, including Morocco’s rating upgrade to BBB, bringing the number of African countries with investment grade ratings to four, although only Morocco has an economy of any significance.
In summary, relatively stable growth, lower inflation, the prospect of higher commodity prices, and a relatively weak US dollar, the currency in which most foreign debt is denominated, make the economic outlook brighter and lower the cost of debt for African countries.
Financial developments
The improved overall financial outlook has enabled new loans to be issued. For example, in early 2026, Benin launched a $500 million bond in the form of a sukuk (Islamic bond), while $350 million was placed with the reopening of a security maturing in 2038, attracting demand of $7 billion. Cameroon placed a five-year $750 million bond.
In 2025, Kenya also made headlines by converting a loan, previously denominated in dollars, into yuan. It should be noted that the transaction in question concerned the Standard Gauge Railway (SGR), a high-speed railway line connecting the port city of Mombasa to Naivasha, via the capital Nairobi, financed by a Chinese bank for $5 billion; this transaction is an example of China’s operating methods in Africa.
According to press sources, the renegotiation of the loan would allow savings of $215 million on debt servicing.
The conversion to yuan has reignited speculation about the replacement of the dollar in the African public debt landscape, but the motivation behind the operation, which other African states are watching closely, can be more prosaically identified as an attempt to reduce interest on the debt. consider that the ten-year rate on the yuan is below 2%, while that on the dollar exceeds 4%.
The debt situation
However, the region’s financial picture remains characterized by high debt, averaging over 60% of GDP according to S&P, with a very negative trend as it has doubled since 2012. S&P identifies the main causes of this trend as years of public spending systematically exceeding budget forecasts, the lack of credibility and predictability of economic policies, and the vulnerability of local economies to shocks.
In this regard, for 2026 alone, S&P estimates that African countries will have to repay $90 billion in foreign debt; in quantitative terms, the largest debtor by far is Egypt with $27 billion, followed by Angola, South Africa, and Nigeria.
The situation is confirmed by the most recent Afreximbank report, according to which Africa’s external debt landscape has continued to evolve significantly with important changes in both the size and structure of the debt.
Afreximbank estimates that Africa’s total foreign debt will exceed US$1.3 trillion by 2025 and is set to grow gradually until 2029, albeit at a slower pace than the sharp increases recorded between 2016 and 2022.
The same report highlights the concentration of foreign debt. With reference to 2025, it shows that South Africa (13.1%), Egypt (12.0%), and Nigeria (8.4%) alone account for more than one-third of the continent’s foreign debt stock. Other major debtors include Morocco (5.9%), Sudan (5.2%), Mozambique (5.4%), and Kenya (4.1%), while the remaining 30% of the continent’s external debt is distributed among smaller economies. The concentration of debt in itself amplifies systemic risks; in particular, it is emphasized that a fiscal crisis in one of the most indebted countries could generate wider regional repercussions through investor sentiment, trade linkages, and cross-border financial channels.
Conclusions
Overall, therefore, the S&P document presents us with a very complex picture in which there are positive elements, indicating an evolution of the situation, which are counterbalanced by the historical delays and fragility of the African reality.
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