Africa borrowing costs fall but remain above global peers

Wednesday 19th November 2025

by inAfrika Newsroom

Africa borrowing costs have eased on international markets this year, yet governments still pay more than peers in other regions. Recent eurobond sales by Nigeria and Kenya drew strong demand, but analysts warn that broader access to cheap credit remains fragile.

Africa borrowing costs ease on new bond issues

Nigeria returned to global markets this month with a 10-year eurobond that attracted heavy oversubscription. The government paid a coupon of 8.625%, down from 10.375% on a similar bond in December 2024. Kenya also tapped investors successfully, with both issues more than five times subscribed.

The tighter pricing suggests investors now view policy risks as lower in some major economies. Nigeria’s decision to unify exchange rates and curb fuel subsidies has impressed markets. Kenya has also pushed fiscal reforms and negotiated support from the IMF.

However, Africa borrowing costs still exceed those of many emerging peers in Asia and Latin America. Rating constraints, shallow domestic markets and lingering concerns over debt levels keep spreads wide. The African Development Bank notes that countries often pay several times more than rich economies when they borrow abroad.

Why Africa borrowing costs matter for growth

High interest bills squeeze budgets that already carry rising demands from health, education and infrastructure. When Africa borrowing costs stay elevated, governments must cut investment or raise distortionary taxes. As a result, job creation suffers and basic services lag behind fast-growing populations.

Lower yields, by contrast, can free fiscal space for roads, power and digital networks. Those assets support private-sector growth and long-term revenues. Moreover, cheaper financing reduces the temptation to take opaque loans that carry hidden risks.

For citizens, the effects show up in daily life. A country that pays less in interest can import more medicines, fund school feeding schemes and maintain key infrastructure. Over time, that shift can make the difference between a stable development path and repeated crises.

Next steps to reduce Africa borrowing costs

International institutions urge African states to deepen domestic capital markets and improve debt transparency. Better data, they say, can reassure investors and help align maturity profiles with project lifecycles. In addition, reforms that boost tax collection and cut waste signal commitment to fiscal discipline.

Multilateral lenders are also exploring credit-enhancement tools, partial guarantees and new green instruments. These products could lower Africa borrowing costs further, especially for climate and infrastructure projects. However, progress will depend on political stability and credible long-term policy.

Next steps include careful use of new bond proceeds, stronger medium-term fiscal frameworks and continued engagement with rating agencies. If governments sustain reforms, Africa borrowing costs may keep trending lower, narrowing the gap with other regions while still supporting vital investment.