African Countries: Taking the Easy Way Out?


Friday, May 10, 2019   / 1:00PM / United Capital Research  / Header Image Credit:


In recent years, most African countries have turned to the international debt capital market to satisfy their funding needs while turning a blind eye to the cheaper but stricter loans by supranational organizations. As at the start of 2019, 20 African countries have tapped into the Eurobond market, bringing the total outstanding African sovereign Eurobond to $92bn with over 50% of the Eurobonds with yields above 7%.

This action has led to various criticism by Economic watchdogs (World Bank and IMF) amid fears that most of the countries in the region might be taking the easy way out and neglecting the long-term risks to rising external borrowings. 

Despite the criticism, African countries do not seem to be slowing their appetite for the relatively less stringent capital. According to recent reports from Bloomberg and Reuters, Kenya is set to become the fourth African country to issue Eurobonds in 2019 as it recently embarked on a Roadshow to sell its new 12-year and 31-year note, trailing the likes of Ghana, Egypt and Benin that had successfully raised a total of $7.6bn in Q1-19. 

In our view, we allude more to the views of IMF and World Bank that African sovereigns need to look inwards to grow revenue and reduce their rising fiscal deficit. With that said, we opine that funds raised in the capital market should be tied to capital projects with matching funding maturity.

Top African Stories 

Zambia's Debt Build-Up Continues Apace Despite IMF Warnings: Zambia, which the International Monetary Fund has warned is at high risk of debt distress, contracted an additional $2.6 billion of new external loans last year, according to the Finance Ministry.  Bloomberg

Nigeria’s Buhari Nominates Emefiele for Second Term as Bank Governor: Nigerian President Muhammadu Buhari nominated central bank Governor Godwin Emefiele for a second five-year term in office, making the 57-year-old former bank chief executive the first to have his term renewed since 1999. Bloomberg

Egypt's core inflation slows to 8.1% in April -central bank: Egypt’s core inflation eased to 8.1% in April from 8.9% in March, the central bank said on Thursday.  Reuters

South Africa's manufacturing output up 1.2% y/y in March: South Africa’s manufacturing output rose 1.2 percent year-on-year in March after increasing by a revised 0.5 percent in February, the statistics agency said on Thursday. Reuters


 Looking Forward

May 13

May 14

May 15

May 16

May 17

May 18

May 19




Apr-19 (CPI) Inflation




Policy Rate Decision



Mar-19 Trade Balance




Policy Rate Decision








Mar-19 M3 Money Supply









Apr-19 (CPI) Inflation





Source: United Capital Research

Visit African Markets in Proshare MARKETS


 Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.


Related News

1.       Emerging Market Demand Responsive to Global Financing Conditions – Fitch

2.      Tough Economic Lessons From Ghana

3.      Banks in AAA Jurisdictions Face Rising Household Debt Risk

4.      South Africa’s Credit Rating Postponement: A breather?

5.      Global Trade Growth Slows Down To 3.3% In 2018

6.      Minutes Of The Federal Open Market Committee, January 29-30, 2019 - Key Takeaways

7.      Eurozone 2019 Growth Forecast Cut to 1%; ECB Could Restart QE

8.     Open-Ended Bond Funds a Potential Risk to Financial Stability - Fitch

9.      Resolving Venezuela's Debt Default to Take Years

10.  Fed's Balance Sheet Still Likely to Shrink Through 2020

11.   Global Government Debt Reaches USD66trn, Driven by Emerging Markets - Fitch

12.  Federal Reserve Issues FOMC Statement Jan 2019

Proshare Nigeria Pvt. Ltd.

Related News