African economies could come under renewed pressure from a stronger U.S. dollar and persistently high global interest rates, threatening currencies, external financing conditions and economic growth across the continent, according to Afreximbank Research.
In its July report on the African macroeconomic environment, the lender said expectations for aggressive monetary easing by major central banks are becoming increasingly unlikely as global growth proves more resilient than anticipated and inflation risks persist.
The warning comes as Africa’s economic outlook remains broadly positive, with growth projected at 4.2% in 2026 and 4.5% in 2027, although the continent’s performance continues to vary widely depending on countries’ fiscal positions, exposure to commodity prices and the pace of economic reforms.
Afreximbank said investors may be underestimating the likelihood that the U.S. Federal Reserve will maintain restrictive monetary policy for longer, despite market expectations of multiple interest-rate cuts next year.
“Should economic growth continue to outperform expectations and labour market conditions remain resilient, the Federal Reserve may choose to maintain policy rates at relatively restrictive levels for longer than markets currently anticipate,” the report said.
The bank warned that a prolonged period of elevated U.S. rates could sustain high borrowing costs worldwide, strengthen the dollar and increase refinancing risks for African sovereigns and companies with dollar-denominated debt.
According to the report, the return of the U.S. dollar index to 101, combined with International Monetary Fund projections that global inflation will rise to 4.7% in 2026, signals that the relatively favorable currency environment seen in the first half of the year may be ending. African borrowers with U.S.-dollar liabilities face renewed foreign-exchange pressure, the report said.
The analysis found that more than 60% of African countries are moderately to highly exposed to oil and gas imports, leaving them vulnerable to higher energy costs that widen current-account deficits, weaken currencies and add pressure to government finances.
External financing risks are also intensifying. Roughly half of African economies face substantial financing constraints, with external funding needs exceeding 10% of gross domestic product, while many countries hold foreign-exchange reserves covering less than three months of imports.
Limited reserve buffers reduce governments’ ability to stabilize exchange rates, finance imports and service external debt during periods of market turbulence, Afreximbank said.
Although inflation is expected to moderate to 8.7% in 2026 and 2027 from 12.5% in 2025, the report warned that food prices, climate-related shocks and geopolitical tensions could delay monetary easing and weaken consumer demand.
Food security remains a major concern, with fertilizer prices projected to increase by 26%, potentially driving up agricultural costs and exacerbating inflationary pressures in countries heavily dependent on smallholder farming.
Despite the risks, Afreximbank said countries with stronger macroeconomic fundamentals, lower inflation, adequate foreign-exchange reserves and manageable debt burdens are better positioned to withstand external shocks and sustain investor confidence.
The lender said strengthening foreign-exchange reserves, boosting domestic revenue collection, diversifying energy sources and accelerating structural reforms will be critical to improving the continent’s resilience as geopolitical tensions and global financial uncertainty persist.
