Growth Drives African Sovereign Ratings to Highest Level Since 2020

BREAKING NEWSMarch 14, 2026 at 2:13 PM UTC

TLDR

Africa's sovereign credit outlook is improving with fiscal reforms and stable economic growth, leading to the highest sovereign ratings since 2020 by S&P Global Ratings.
Some countries, like South Africa and Kenya, have shown significant improvement in fiscal management, leading to rating upgrades and stronger external accounts.
Despite progress, challenges remain such as government debt exceeding 60% of GDP on average, with some countries like Botswana and Senegal facing downgrades due to specific economic challenges.

Africa’s sovereign credit outlook is improving as economic growth stabilizes and fiscal reforms take hold across several countries, according to recent sovereign rating assessments. S&P Global Ratings shows African sovereign ratings at their highest level since 2020. The improvement comes as some governments reduce fiscal deficits and strengthen foreign reserves.

The outlook improves after several years of economic pressure caused by the pandemic, high global interest rates and currency volatility.

Government debt remains a major constraint. Average public debt across African economies now exceeds 60% of gross domestic product. That level is nearly double the average recorded in 2012.

The United Nations Economic Commission for Africa estimates the continent’s total public debt reached $1.86 trillion in 2024.

S&P says persistent fiscal overspending has been a key driver of credit deterioration over the past 2 decades. Rising borrowing needs and higher debt service costs have limited investment in infrastructure and economic development.

The issue is critical as African economies require large investment to expand digital infrastructure, transport networks and energy systems.

Some countries recorded rating upgrades due to fiscal progress and stronger external accounts.

South Africa’s sovereign rating was raised to BB with a positive outlook. The upgrade reflects improvements in fiscal management and lower risks tied to the state power utility Eskom. The government is expected to record a third consecutive primary budget surplus in fiscal year 2025.

Kenya also showed improvement. Strong coffee exports and higher remittances from the diaspora helped narrow the current account deficit. Foreign exchange reserves rose to $12 billion at the end of 2025 compared with $6.6 billion at the end of 2023.

Other countries showing improvement include Morocco, Egypt, Togo, Ghana and Zambia.

Not all countries saw progress.

Botswana’s rating was downgraded to BBB due to weaker diamond exports. Diamonds account for about 80% of Botswana’s export revenue, making the economy sensitive to changes in global demand. The growth of lab-grown diamonds has reduced demand for natural stones.

Senegal’s rating was lowered to CCC+ and placed on CreditWatch Developing after previously undisclosed borrowing increased its debt burden. Political instability also contributed to the downgrade.

Many African governments are turning to debt liability management strategies to manage rising debt costs. These include refinancing existing debt and restructuring repayment profiles.

Countries pursuing these strategies include Côte d’Ivoire, Benin, Angola, Uganda, Congo-Brazzaville, South Africa, Mozambique and Kenya.

Points clés à retenir

Africa’s sovereign debt levels increased after the pandemic as governments borrowed to support economies and fund infrastructure projects. At the same time global interest rates increased, raising the cost of borrowing for emerging markets. Several African countries lost access to international bond markets between 2022 and 2023 as investors shifted toward safer assets in developed economies. This pushed governments to rely more on domestic borrowing and multilateral lenders. Debt service costs now consume a large share of government revenue in many countries. Despite these pressures, some economies are stabilizing as inflation slows and commodity exports recover. Countries that improved fiscal management and export performance have seen stronger reserves and lower external financing pressure. Investors monitor sovereign ratings because upgrades can reduce borrowing costs and attract foreign capital. Debt refinancing and liability management are becoming common strategies as governments try to extend repayment schedules and reduce near-term pressure on budgets. Long-term growth prospects depend on infrastructure investment, trade expansion and economic diversification beyond commodities. As global financial conditions stabilize and reforms continue, credit conditions for several African sovereigns may improve, though debt sustainability remains a key risk across the region.

Economy