African Borrowers to Gain from Weaker U.S. Dollar

According to S&P, African borrowers are set to benefit from a weaker U.S. dollar, which could help alleviate import inflation and lessen the burden of external debt. The firm noted improvements in global liquidity due to tight global monetary policies aimed at controlling inflation from April 2021 to April 2023, leading to increased investor appetite for local currency bonds in countries like Nigeria, Egypt, Uganda, and Zambia.

S&P anticipates that Nigeria and Angola will borrow in 2025 and 2026, respectively, partly due to pre-election spending and favorable oil sector dynamics. Ghana is expected to increase borrowing in 2025 following austerity measures enacted in response to significant fiscal slippage in 2024.

Zambia's local currency bond market has attracted substantial inflows, and S&P emphasizes that the benefits of these trends will be unevenly distributed among sovereigns, depending on their monetary frameworks and fiscal consolidation efforts.