African countries are regaining access to international debt markets after a prolonged freeze, but the cost of borrowing remains elevated, reflecting persistent investor caution and tighter global financial conditions.
Governments across the continent raised about $5.4 billion in Eurobonds according to Afreximbank, by the end of February 2026, led by Kenya, Côte d’Ivoire and the Republic of Congo, marking a tentative reopening of global capital markets after months of limited access.
The return, however, comes with a price. Yields on recent issuances remain significantly higher than pre-tightening levels, underscoring the risk premium investors continue to demand for exposure to African debt. The higher borrowing costs highlight a shift in market dynamics, where access is no longer the primary constraint, but affordability.
Investor appetite is concentrated among a narrow group of issuers with relatively stronger credit profiles or credible reform programs. Countries able to demonstrate fiscal consolidation, improved debt management or macroeconomic stability are leading the return to markets.
Kenya’s $2.25 billion issuance and Côte d’Ivoire’s $1.3 billion deal illustrate this trend, as investors differentiate more sharply between sovereign risks in an environment of tighter global liquidity. For lower-rated or distressed economies, access remains constrained, forcing continued reliance on concessional financing and multilateral support.
The elevated cost of borrowing reflects broader global conditions rather than purely domestic factors. Major central banks, including the Federal Reserve, have maintained a “higher-for-longer” interest rate stance, keeping global yields elevated and reducing risk appetite. At the same time, geopolitical tensions and rising oil prices have increased market volatility, prompting investors to demand higher compensation for holding frontier market debt.
This environment has effectively reset Africa’s external financing landscape, with sovereigns facing a structurally higher cost of capital even as markets reopen. African sovereigns are projected to raise about $155 billion in commercial borrowing in 2026, in line with historical averages, but much of this will be driven by refinancing needs rather than new spending.
Higher yields translate directly into increased debt servicing costs, adding pressure to already constrained fiscal positions. For countries with large external debt maturities, the combination of elevated rates and currency depreciation could amplify vulnerabilities.
Improving credit outlooks for some countries signal a gradual shift in investor sentiment, suggesting confidence in reform trajectories and macroeconomic stabilization efforts. Still, the recovery in market access remains uneven and fragile. The report underscores that Africa’s re-entry into global capital markets is not a return to pre-2022 conditions, but a transition to a more selective and risk-sensitive environment. Borrowers must now navigate tighter liquidity, higher costs and greater scrutiny from investors.
For policymakers, the challenge is clear: sustaining access will depend not only on global conditions, but on maintaining credible reforms and strengthening fiscal resilience in an increasingly unforgiving market.
