NAIROBI, Kenya — Accumulated debt stocks will remain a major risk for African economies in 2026 as structurally high debt levels and weak revenue mobilisation continue to strain public finances, according to credit ratings agency S&P Global.
In its February sovereign ratings outlook, S&P said rising debt-servicing pressures have heightened external vulnerabilities across the continent, despite improved growth prospects and reform momentum in several countries.
The agency estimates that principal external debt repayments by rated African sovereigns will total about $90 billion (Sh11.6 trillion) in 2026—more than three times the level recorded in 2012. Nearly a third of these repayments are attributed to Egypt, followed by Angola, South Africa, and Nigeria, underscoring the scale of refinancing risks facing large African borrowers.
For Kenya, S&P noted that near-term external liquidity pressures have eased, supported by strong coffee exports and resilient diaspora remittances. These inflows have helped push foreign exchange reserves to a record high of about $12 billion (Sh1.5 trillion).
“Debt liability management operations have also reduced Eurobond principal payments to a manageable $108 million (Sh13.9 billion) over 2026–2027,” the agency said, signalling reduced immediate refinancing stress.
However, the ratings firm warned that fiscal consolidation efforts could face political headwinds ahead of the August 2027 General Election. It said rising social pressures could delay reforms and complicate access to concessional financing from the International Monetary Fund and the World Bank.
“In this context, we expect the government will continue to rely on costlier domestic borrowing and external commercial facilities, keeping interest costs elevated at more than 30pc of government revenue,” S&P said.
The agency’s assessment mirrors concerns previously raised by multilateral lenders over Kenya’s rising debt-servicing costs, which have constrained spending on development and social programmes even as revenues improve.
Across the continent, S&P said Africa’s average sovereign credit rating has climbed to its highest level since late 2020. The improvement reflects reform efforts, better liquidity conditions and progress in resolving debt restructurings under the G20 Common Framework in countries such as Ghana and Zambia.
Even so, the agency cautioned that translating recent gains into sustained improvements in debt sustainability and fiscal metrics will take time, particularly for countries with narrow tax bases and heavy reliance on external borrowing.
The outlook remains mixed despite relatively strong growth prospects. S&P projects average real GDP growth for African economies at about 4.5pc in 2026, supported by domestic demand, infrastructure investment, and easing inflation in several markets.
Lower oil price assumptions, however, are expected to weaken fiscal balances for some oil-exporting countries, while stronger prices for commodities such as gold and copper should support revenues for mineral exporters.
“While lower financing costs and strong growth should bolster many economies in 2026, reducing indebtedness and sustainably increasing fiscal revenue-generating activity will take time,” the agency said.
S&P concluded that managing debt vulnerabilities while maintaining growth-enhancing reforms will remain a delicate balancing act for African governments as global financing conditions remain tight and domestic political pressures intensify.
