Africa’s credit outlook is improving as economic reforms, stronger commodity prices and better access to financing support government finances, while the launch of the Africa Credit Rating Agency (AfCRA) has renewed debate over how the continent’s credit risks are assessed.
Moody’s Investors Service recently revised its outlook for sub-Saharan Africa from stable to positive, with eight of the 25 sovereigns it rates in the region receiving positive outlooks. The agency cited reforms that have helped governments manage inflationary pressures, alongside favourable commodity prices and improved financing conditions.
The countries with positive outlooks are South Africa, Namibia, Angola, Nigeria, Togo, Ghana, the Republic of Congo and Zambia. Thirteen countries have stable outlooks, while Mauritius, Gabon, Mali and Senegal have negative outlooks.
The latest assessment marks an improvement from January 2025, when Moody’s changed its regional outlook from negative to stable, citing expectations of stronger economic growth and fiscal consolidation.
However, a positive outlook does not mean an immediate credit rating upgrade. It indicates that an upgrade may follow if improvements in a country’s economic and financial position are sustained.
Debt pressures remain a concern
Despite the more favourable outlook, African economies continue to face significant financial challenges, including heavy debt repayments, limited government revenue, climate risks and security concerns.
Kenya and Zambia, for instance, are expected to spend about 35 per cent of government revenue on interest payments in 2027, among the highest proportions in the region.
Moody’s projects sub-Saharan Africa’s weighted-average economic growth at 4.3 per cent in both 2026 and 2027. Government borrowing needs are expected to decline to 11.2 per cent of gross domestic product (GDP) in 2027, from 12.3 per cent in 2025.
Total government debt is projected to fall to 56.6 per cent of GDP in 2027, compared with 62.4 per cent in 2025.
Nevertheless, prolonged inflation, severe weather events or a sudden withdrawal of investors from African bond markets could weaken the recovery. Only Botswana and Mauritius currently hold investment-grade ratings among the 25 sub-Saharan African sovereigns rated by Moody’s.
AfCRA seeks to change how African risks are assessed
The improving outlook comes as African governments push for greater influence over how international investors assess the creditworthiness of their economies and businesses.
Launched in Mauritius on October 7, 2026, AfCRA is an African Union-backed initiative designed to provide additional credit assessments informed by African data, economic conditions and institutional realities.
The agency is expected to complement established rating firms, including Moody’s, S&P Global Ratings and Fitch Ratings, rather than replace them.
African policymakers have argued that international assessments do not always adequately reflect the continent’s economic circumstances. They say this can contribute to high borrowing costs and restrict access to capital needed for infrastructure and development.
The financing challenge is substantial. The African Union estimates that the continent’s external debt-servicing obligations rose from $61 billion in 2010 to $163 billion in 2024.
An Africa-focused rating agency could provide investors with additional information and a broader perspective on the risks associated with lending to African governments and companies.
However, its ability to influence borrowing costs will depend on its independence, transparent rating methods and acceptance by investors. Establishing the agency does not automatically change existing sovereign ratings or guarantee cheaper loans.
Credit rating changes show uneven recovery
Developments across the continent illustrate that improvements in credit conditions are not uniform.
S&P Global Ratings upgraded seven African sovereigns in 2025, citing stronger growth prospects, economic reforms, fiscal improvements and progress on debt restructuring. However, it downgraded Botswana and Senegal, reflecting weaker diamond prices and mounting debt pressures.
South Africa has also recorded improved investor sentiment. Moody’s revised its outlook for the country to positive from stable in May, citing progress in stabilising debt and implementing reforms to support growth.
Despite the improvement, South Africa’s Ba2 rating remained two notches below investment grade, demonstrating that a positive outlook does not necessarily mean a country has already secured a stronger rating.
Zambia and Ethiopia are expected to record some of the largest declines in debt ratios, while Botswana and Gabon could experience the sharpest increases, reflecting weak diamond demand and difficulties controlling government spending, respectively.
Nigeria records rating improvements but faces fiscal constraints
Nigeria’s recent rating decisions reflect both improving investor sentiment and continuing weaknesses in public finances.
Moody’s revised Nigeria’s outlook to positive from stable in August while affirming its B3 sovereign rating. Fitch Ratings followed on October 9, changing the outlook on Nigeria’s Long-Term Issuer Default Ratings to positive from stable while maintaining its B rating.
S&P Global Ratings had upgraded Nigeria’s sovereign rating from B- to B in May, although it retained a stable outlook.
The agencies cited improvements in Nigeria’s external position and progress in economic reforms. Stronger foreign exchange reserves, exchange-rate reforms and improving macroeconomic conditions have supported the more favourable assessments.
However, Nigeria remains below investment grade. Fitch expects the federal government’s interest payments to average 27 per cent of revenue between 2026 and 2028, compared with a median of 14 per cent for countries with similar ratings.
Weak government revenue, elevated inflation and security challenges continue to constrain the country’s credit profile.
Credibility will determine AfCRA’s impact
AfCRA’s long-term influence will depend on whether international investors consider its assessments reliable enough to guide lending and investment decisions.
A credible agency could broaden the information available about African economies, improve the assessment of local businesses and institutions, and increase competition in the credit-rating market.
However, lower borrowing costs will also depend on governments’ fiscal performance, political and economic stability, currency risks and the depth of local capital markets.
For African borrowers, the challenge is therefore twofold: ensuring that credit assessments adequately reflect local economic conditions while maintaining the independence and analytical standards needed to earn investor confidence.
