S&P Global Ratings has warned that African governments face growing risks associated with indebtedness, as hard-currency debt repayment schedules due in 2026 increase pressure on external reserves and heighten refinancing risks.

In its latest report on the African sovereign outlook, published on Monday, the agency indicates that government external debt repayments are now more than three times higher than those recorded in 2012.

“Structurally high debt and reduced, concentrated revenue bases will continue to pose key risks and, with government external debt repayments potentially exceeding 90 billion dollars this year, external vulnerabilities have also increased”, wrote Benjamin Young, an S&P analyst, adding that “government external debt repayments are approaching a peak”.

Egypt accounts for almost a third of the total forecast for this year, with around 27 billion dollars in principal repayments, followed by Angola, South Africa and Nigeria.

S&P notes that the region's average sovereign rating has reached its highest levels since the end of 2020, reflecting the momentum of reforms and improved economic growth. Even so, this is above all a sign of the stabilisation of key credit metrics rather than a significant improvement, since the structural adjustments needed to reduce debt levels tend to require longer timescales.

Easier global financial conditions and investors' interest in diversifying their portfolios have reopened the door for several African states to return to international capital markets. However, some countries, such as the Republic of the Congo, have been forced to offer double-digit yields in recent months — levels considered excessively high for issuers — leading several governments to turn to off-market transactions, such as private placements or “total return swap” agreements.

S&P projects that economic growth will remain stable, with an average real GDP growth rate of 4.5% in 2026, while budget deficits are expected to narrow modestly to around 3.5% of GDP. Even so, public debt is expected to remain high, at around 61% of GDP on average.

The growing weight of repayments is leading several governments to adopt liability management strategies — including buybacks, swaps and maturity extensions — with the aim of reducing refinancing risks. Countries that have turned to these approaches include Ivory Coast, Benin, Uganda, the Republic of the Congo, Mozambique, Kenya and South Africa.