Africa’s Borrowing Gap: Risk, Not Malice, Drives Higher Interest Rates
African sovereigns face significantly higher borrowing costs, reaching 9% in 2024 compared to 4.7% in emerging Asia, a gap that costs the continent $75 billion annually due to credit rating subjectivity. Despite strong economic growth across Africa, 80% of rated sovereigns are classified as speculative, and only four hold investment-grade ratings, indicating a disparity between economic fundamentals and perceived risk. The impending launch of the African Credit Rating Agency in June 2026 offers a potential avenue to challenge this pricing gap by providing region-specific assessments and introducing competition to the dominant global rating agencies.
John Q. Hosedrinker