African Sovereign Debt to Reach 45% of GDP in 2026 – S&P
African sovereign debt is projected to reach 45% of the continent’s gross domestic product (GDP) by the end of 2026, driven by additional borrowing.
In a non-rating note, S&P Global Ratings estimates that commercial long-term borrowing by rated African sovereigns will reach $155 billion in 2026, up from $140 billion in 2025.
This rise is driven by maturing debt obligations and ongoing fiscal financing needs. Ratings analysts project that total outstanding African sovereign commercial debt will exceed $1.2 trillion, constituting 45% of GDP (including short-term debt) by the end of 2026.
Although borrowing needs and costs vary across the continent, the annual median borrowing for the 27 rated issuers is approximately $1.5 billion in absolute terms, S&P said, noting that the amount is significantly lower than that of global peers.
This disparity is partly due to the smaller size of many African economies and the greater reliance on concessional (non-commercial) financing in their debt profiles.
S&P noted that the relatively low dollar amounts of African sovereign debt reflect the high average cost of commercial borrowing for African governments. As well, their narrower, more specialised investor base typically includes smaller domestic banks and non-bank financial sectors.
The report highlighted that the requirements for rolling over debt and the associated costs diverge significantly, often accounting for a larger share of GDP and fiscal revenues than the global average.
S&P said three larger issuers, namely Egypt, Morocco, and South Africa, dominate the region due to their more substantial economies, more developed financial systems, and long-standing access to markets.
However, the ratings agency said that the ongoing conflict in the Middle East, along with its impacts on supply chains and hydrocarbon prices, presents risks to Africa’s borrowing plans for 2026.
“We expect the war and its implications for hydrocarbon shipping lanes, particularly the Strait of Hormuz, will begin to stabilise in the coming weeks,” S&P stated. “However, if the conflict persists beyond that, it could negatively affect fiscal positions, inflation rates, and financing plans across Africa.”
Since most African countries rely heavily on refined fuel imports, rising prices could put additional pressure on governments, particularly if central banks raise policy rates to curb inflation, the note says.
S&P indicated that budget deficits could widen in Angola and Egypt, which provide substantial fuel subsidies. Favourable external financing costs, currently at multi-year lows, offer some relief, enabling governments to refinance upcoming foreign currency maturities at lower expenses.
