African Governments Face a Growing Need to Satisfy External Debt Obligations

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According to Fitch Ratings, Sub-Saharan Africa, excluding South Africa (SSAx), will face a heightened external debt service burden for 2023-2025. 

The expected payments due during these years are considerably higher than what was experienced in 2019 – 2021. 

Fitch has adjusted World Bank data to provide a more comprehensive outlook, revealing that total external debt service payments due from Fitch-rated SSAx sovereigns in 2023 will amount to USD 22.3 billion – an increase from the current USD 21.4 billion for 2022. However, Ghana (CC) and Zambia (Restricted Default) have been excluded as their restructuring process could affect these figures substantially and differ drastically from Fitch’s definitions of debt calculations.

In the context of rising borrowing costs in many developed nations, refinancing is complicated for governments with low credit ratings. Nevertheless, few African countries have Eurobond maturities in 2023. Nigeria (B-/Stable) faces a USD500 million bullet payment due in July. Rwanda (B+/Negative) has an outstanding debt to pay of USD61 million on a bond maturing this May among the select nations, with bonds expiring soon.

In December, Cote D’Ivoire (BB-/Stable) and Gabon (B-/Positive) must make payments of USD56 million and USD37 million, respectively. Cameroon (B/Stable), on the other hand, has debt repayments totalling an annual amount of fifty million U.S. dollars from 2023 to 2025 consecutively.

According to the World Bank, the total debt service due in 2024 will spike significantly by 12%, amounting to USD 25 billion. 

“Given the high cost of debt servicing, African governments will need to develop innovative solutions for raising capital and managing their debt portfolios to meet their financial obligations,” advised Ricardo Da Silva, senior director at Fitch Ratings.

“One option for many countries is to explore alternative sources of financing such as China’s Belt and Road Initiative (BRI). However, BRI loans have complex terms that can jeopardize a country’s sovereignty.”

Additionally, more nations are expected to face large Eurobond bullet payments, with Kenya (B/Stable) required to pay up to USD2 billion maturing in June and Ethiopia (CCC/Under Criteria Observation) needing to settle its USD1 billion payment come December.

In July and December, Cote D’Ivoire is expected to pay off a total of USD196 million in 2024 through bullet maturities. Gabon’s bond payments are much lower at an estimated USD37 million, while Benin (B+/Stable) will owe another USD63 million in the same year.

According to World Bank statistics, Africa’s overall sovereign debt service payments in 2025 are expected to rise by nearly 7%, amounting to around USD26.8 billion due mainly from bonds maturing in Angola (B-/Positive), Cote D’Ivoire, Gabon, Ghana, Kenya, Namibia and Nigeria.

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