KIGALI, May 15 – African governments are increasingly turning to unconventional borrowing strategies as tighter global financial conditions and elevated interest rates make traditional dollar funding more expensive and difficult to access.
According to Citigroup Inc., sovereign borrowers and corporates across the continent are exploring financing in lower-yielding currencies such as the Swiss franc, euro and some Asian currencies to reduce debt-service costs.
“They are looking to borrow in lower-yielding currencies, lower-interest-rate currencies,” said Akin Dawodu during an interview on the sidelines of the Africa CEO Forum in Kigali.
The shift highlights how African issuers are increasingly adopting more sophisticated financing structures as rising debt burdens, weaker local currencies and tighter access to international capital markets strain public finances.
Nigeria recently announced plans to raise $5 billion from the United Arab Emirates, while Kenya is considering a $1 billion debt-for-food swap and preparing a $350 million Samurai bond issuance.
Egypt has also expanded its use of yuan-denominated financing and diversified bond issuances as it deepens economic ties with China.
Meanwhile, South African Reserve Bank Governor Lesetja Kganyago recently signaled openness to euro liquidity arrangements.
“There’s lots of interest in African issuers and African debt,” Dawodu said, citing the continent’s economic growth prospects and natural-resource base.
According to the International Monetary Fund, sub-Saharan Africa is expected to be the world’s second-fastest-growing region this year, expanding by 4.3%, behind only emerging and developing Asia.
However, the growing use of complex financing instruments also introduces new risks for countries with limited foreign-exchange reserves or weaker debt-management capacity.
The IMF has warned that some frontier economies may lack the technical infrastructure and hedging tools required to effectively manage foreign-currency exposure tied to sophisticated debt structures.
Debt transparency concerns and shallow domestic capital markets could also increase refinancing risks if global liquidity conditions tighten further.
The financing shift reflects a broader effort by African governments to diversify funding sources and reduce dependence on traditional dollar-denominated borrowing amid increasingly volatile global markets.
