JOHANNESBURG, Feb 3 – African governments are facing mounting debt pressures as hard-currency repayment obligations surge in 2026, testing external buffers and increasing refinancing risks, according to S&P Global Ratings.
In its latest African sovereign outlook published on Monday, the ratings agency said government external debt repayments are now more than three times higher than in 2012, reflecting a decade of rising borrowing and limited progress in reducing debt stocks.
“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,” wrote Benjamin Young, S&P’s primary analyst for the region. “Government external debt repayments are approaching a peak.”
Egypt accounts for almost one-third of the total repayment burden, with about $27 billion in principal repayments due in 2026. Other major contributors include Angola, South Africa and Nigeria, underscoring the concentration of risk among the continent’s largest economies.
S&P noted that average sovereign credit ratings across Africa have climbed to their highest levels since late 2020, reflecting reform efforts, improved growth prospects and some easing in macroeconomic pressures.
However, the agency cautioned that this improvement largely signals stabilisation rather than a meaningful reduction in debt vulnerabilities, as structural reforms typically take longer to translate into lower debt burdens.
Easing global financial conditions and renewed investor appetite for diversification have allowed several African sovereigns to re-enter international capital markets. Yet access has often come at a high cost. Countries such as the Republic of Congo have had to offer double-digit yields in recent bond issuances, levels widely viewed as expensive and unsustainable over the long term.
As a result, a growing number of governments are turning to alternative financing routes, including private placements and complex structures such as total return swaps, to manage funding needs while avoiding prohibitively high market rates.
Economic growth across the region is expected to remain steady, with average real GDP expansion forecast at 4.5% in 2026. Fiscal deficits are projected to narrow modestly to about 3.5% of GDP. Even so, government debt levels are expected to remain elevated at around 61% of GDP on average, limiting fiscal flexibility.
The rising debt redemption burden is pushing several governments to adopt liability management strategies aimed at reducing refinancing risks. These include bond buybacks, debt exchanges and maturity extensions. Countries already employing such measures include Côte d’Ivoire, Benin, Uganda, the Republic of Congo, Mozambique, Kenya and South Africa, according to S&P.
