African governments are increasingly turning to multilateral lenders to diversify funding sources in 2026, even as debt distress risks remain high across the continent, S&P Global Ratings said on Tuesday.
Samira Mensah, head of national ratings and analytics for Africa at S&P, said more than twenty countries were facing a high risk of debt distress or severe vulnerabilities, according to International Monetary Fund (IMF) assessments.
“In the current environment, resilience to external shocks is critical because Eurobond borrowing typically comes in dollars,” Mensah said.
Sub-Saharan African bond issuance has recorded its strongest start to a year on record, with around six billion dollars raised so far by countries including Benin, Kenya and Ivory Coast. Analysts said lower borrowing costs are helping governments tap international capital markets despite ongoing fiscal pressures.
Further issuances are expected, including a maiden Eurobond sale by the Democratic Republic of Congo. S&P said that by leveraging multilateral development banks (MDBs) and regional institutions, African nations could mobilize capital at more attractive yields while spreading risk.
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Mensah noted that new sovereign lending could provide between ninety billion and one hundred twenty billion dollars in additional financing for the continent this year, bolstering budgets for infrastructure, social spending, and economic recovery programs.
While access to multilateral financing can reduce the cost and volatility of borrowing, S&P highlighted that credit metrics across the region remain uneven. Some countries have made progress with reforms, while others are grappling with policy setbacks, macroeconomic shocks and high debt service obligations.
“Countries that maintain reform momentum and diversify their sources of financing will be better positioned to manage risks and protect economic growth,” Mensah said.
The shift toward MDBs and regional development banks reflects a broader strategy by African governments to mitigate exposure to foreign exchange volatility, particularly as most sovereign Eurobonds are denominated in dollars.
Investors and policymakers have praised the strategy as it allows governments to reduce dependence on private capital markets, which can be highly sensitive to global financial conditions.
The strong start to the year in bond issuance comes as African nations seek to finance infrastructure projects, stimulate growth, and respond to lingering social and economic effects of the COVID-19 pandemic and global commodity shocks.
Analysts said that while risks remain, including potential external shocks and currency fluctuations, coordinated borrowing through multilateral lenders could help stabilize funding and support longer-term development objectives.
S&P emphasized that monitoring debt sustainability and macroeconomic indicators will remain crucial as countries expand their external borrowing. Countries with strong governance, credible fiscal policies and effective debt management frameworks are expected to benefit most from this trend.
With multilateral lenders providing a growing share of sovereign financing, African nations aim to combine fiscal prudence with the flexibility to invest in strategic priorities while reducing vulnerability to sudden shifts in investor sentiment.
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For investors, this signals a more diversified and potentially lower-risk African debt landscape, even as some economies continue to face significant fiscal and structural challenges.
The trend highlights the continent’s ongoing efforts to balance economic growth, debt sustainability and investment in critical infrastructure through innovative financing solutions and international partnerships.
