S&P Global Ratings has forecast that African sovereigns’ gross commercial borrowing will reach $155 billion (R2.6 trillion) in 2026.
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S&P Global Ratings has forecast that African sovereigns’ gross commercial borrowing will reach $155 billion (R2.6 trillion) in 2026, a figure “in line with longer-run annual volumes” but marked by stark divergences across the continent.
While Egypt, Morocco, and South Africa will continue to dominate regional issuance, the report highlights South Africa’s unique position: “South Africa’s large domestic financial system, actively traded currency, and well-developed yield curve mean it benefits from considerably more fiscal flexibility than nearly all other nations in our survey.”
In a notable shift, S&P forecast: “South Africa’s 2026 borrowing will decrease the most among African sovereigns, largely due to its narrowing fiscal deficit and higher concessional funding.”
The country’s gross commercial long-term borrowing is projected at $17.1bn for 2026, representing 11% of the continent’s total commercial borrowing. Its total commercial debt stock is expected to reach $322.9bn by year-end, accounting for 27.6% of Africa’s total.
Despite the anticipated decline in new borrowing, South Africa’s debt profile remains substantial. “Its maturity profile remains relatively steady at just under $6 billion,” the report noted.
Crucially, South Africa’s debt structure reflects its advanced financial market: Only 10.2% of its total debt is denominated in foreign currency, compared to a continental average where foreign currency debt accounts for 64% of total debt among smaller banking systems, according to the report. The rollover ratio — debt requiring refinancing as a percentage of GDP — stands at a manageable 8.9%, well below Egypt’s 31.7%.
While South Africa’s borrowing recedes, Egypt emerges as the continent’s most active borrower. “Egypt stands out as the sovereign forecast to increase borrowing the most in 2026,” S&P stated, projecting borrowing of about $50bn.
This surge is “primarily due to a wider projected fiscal deficit”, compounded by the aftermath of the 2024 exchange rate liberalisation. “High inflation pushed up domestic borrowing costs, leading to one of the highest interest-to-revenue ratios globally, estimated at about 70% in 2026.”
Egypt’s financing strength, however, remains its domestic financial depth: “One of Egypt’s key financing strengths, even compared with emerging markets outside of sub-Saharan and North Africa, is its large financial sector compared to gross domestic product (GDP). The vast majority of Egyptian banks’ claims are on the central government, via its large holdings of domestic sovereign debt.”
Senegal presents a contrasting challenge. “Senegal is contending with more limited access to concessional financing amid rising borrowing costs during 2026 and after a series of revisions to public finances revealed additional previously unreported debt. We expect Senegal will rely heavily on shorter-term domestic commercial debt, requiring frequent refinancing.”
S&P said it anticipated Senegal would borrow about $10bn in 2026, with roughly two-thirds through commercial markets and 46% from domestic issuances.
The report underscored: “Commodity price cycles significantly shape African sovereign borrowing dynamics, reinforcing the region’s procyclical credit profile.” For exporters such as Angola, Nigeria, Zambia, and Ghana: “Higher oil, copper, or gold prices strengthen trade balances, bolster fiscal revenues, and support FX reserves. They also typically lead to spread compression and improved market access.”
Yet, even commodity windfalls face headwinds. “We expect Nigeria and Angola to borrow more in 2026 than last year, as we expect additional pre-election spending will limit supportive oil sector dynamics and revenue gains associated with their ongoing tax reforms and revenue collection measures.”
Ghana, meanwhile, “will also borrow more this year. This is because it restarts capital-related spending following austerity in 2025 in response to the major fiscal slippages in 2024”.
Encouragingly, debt restructuring progress is unlocking market access. “Ghana and Zambia also stand to benefit from renewed investor interest as they near the end of prolonged debt restructurings.”
In Zambia: “The Bank of Zambia increased the limit on local currency bonds that nonresidents can purchase in the primary market to 23% from 5%, and high yields have attracted significant inflows in recent months.”
For Ghana, however, caution persists: “While Ghana’s macroeconomic environment is improving, the government has yet to restart issuing bonds with maturities over one year. Additionally, yields on short-term treasury bills have fallen sharply. We anticipate that the government will slowly begin issuing longer-dated bonds, thus lengthening its maturity profile.”
Favourable external conditions provide a tailwind. “African sovereign borrowers also stand to benefit from a weaker US dollar, because it eases imported inflation and reduces the local currency burden of external debt.
“Improving global liquidity, following tight global monetary policy in response to global inflation between April 2021 and April 2023, increases investor appetite and non-resident inflows into local currency bond markets, notably in Egypt, Nigeria, Uganda, and Zambia. This contributes to foreign exchange (FX) stabilisation and lower local currency yields.”
S&P said: “Easier global monetary policy conditions should also facilitate access to foreign currency financing. Spread compression enhances market access, as investors demand a smaller risk premium. This enables refinancing and liability management, which we expect will increase. Market access typically improves before price relief.”
However, geopolitical risks loom. “The Middle East war and its effects on supply chains and hydrocarbon prices pose risks to Africa’s borrowing plans for 2026.” While S&P expects “the war and its implications for hydrocarbon shipping lanes, particularly the Strait of Hormuz, will begin moderating over the next few weeks”, a prolonged conflict “could impair fiscal positions, inflation profiles, and financing plans across Africa”.
The vulnerability is acute: “Since most African countries rely heavily on refined fuel imports, rising prices could put additional strain on governments. This is particularly the case if central banks begin raising their policy rates to manage inflation. Additionally, budget deficits could widen in Angola and Egypt, which provide sizeable fuel subsidies.”
A persistent challenge across the continent is shallow domestic capital markets. “Low savings rates and shallow domestic financing capacity limit local currency borrowing in many sovereigns,” S&P observed. “Countries with smaller banking systems account for half of rated African sovereigns. These countries often have a greater proportion of foreign currency debt (64% of total African debt).”
The cost implications are severe. “Without cheaper bilateral and multilateral funding sources, most countries in this group — including Nigeria, Angola, Uganda, Zambia, and Ghana — display interest-to-revenue ratios at least double the global average of about 9%,” according to S&P.
Macroeconomic instability exacerbates the problem: “Many countries face expensive domestic financing, largely driven by macroeconomic factors, such as currency depreciation-led inflation, resulting in tight monetary policy, limited domestic demand, and low fiscal revenue bases.”
Conversely, access to concessional funding provides relief. “Countries with access to concessional or multilateral funding — such as Rwanda, Madagascar, Ethiopia, Democratic Republic of Congo (DRC), Cameroon, and Cape Verde — can maintain lower borrowing costs, highlighting the heterogeneity of financing conditions across structurally similar systems.”
At the aggregate level, S&P’s outlook is measured. “We forecast that African sovereigns’ gross commercial borrowing will reach $155bn in 2026, which is in line with longer-run annual volumes.” Total outstanding commercial debt is projected to exceed $1.2trln, or 45% of GDP, by end-2026.
Yet the median tells a different story. “At $1.5bn, African sovereigns’ median commercial issuance volume will remain small by global standards, generally mirroring their economic size, limited market access, and structural factors.”
The rating distribution reflects this constraint: African sovereign commercial debt in 2026 is concentrated in the “BB” (32%) and “B” (50%) categories, with “BBB” at 10%, “CCC” at 7%, and selective default at 4%.
Ultimately, the report emphasises that benefits from improved global conditions “will remain unevenly felt”. As S&P concludes: “Sovereigns with sound monetary frameworks, fiscal consolidation momentum (demonstrated by improved revenue collection), and adequate reserve buffers are better positioned to attract durable inflows. The reversibility of portfolio flows and reliance on non-resident borrowing pose risks, increasing exposure to dollar volatility.”
For South Africa, the combination of institutional depth, currency liquidity, and a narrowing fiscal deficit positions it uniquely on the continent. But as the broader African debt landscape evolves in 2026, the interplay of global liquidity, commodity cycles, and domestic reform will determine which sovereigns navigate the $155bn borrowing wave with resilience — and which are swept away by its currents.