S&P Global Ratings took 11 positive foreign currency rating actions on sovereigns across Africa in 2024, more than double those we took in 2023. We started 2025 with five sovereigns on positive outlook, of which we had upgraded one in 2024. The picture is still mixed, however, as the continent slowly emerges from a low base of economic development. Some African economies are experiencing robust economic growth while others continue to face economic and fiscal hurdles, including rising debt and related servicing costs. For 2025, we forecast economic growth across our rated African sovereigns will outperform our 3.0% global GDP growth forecast, averaging 4.8%. However, this is only a slight improvement from the 4.4% average the region recorded in 2024.

In some instances, regional financial institutions' intrinsic creditworthiness is stronger than their respective sovereigns', which tends to constrain our ratings on those institutions.

Our rating actions on corporates were partly driven by our sovereign rating actions, notably in South Africa. Companies focused on their domestic markets have generally proven more resilient than commodity producers during periods of high global uncertainty. Conversely, commodity exporters faced muted global demand, which led to softer prices for some metals, diamonds, and coal.

Some African sovereigns saw positive rating momentum in 2024

Of the 54 sovereigns in Africa, we publicly rate 26. Half of our sovereign credit ratings are in the 'B' category, while a quarter are in the 'BB' category or above. The sovereigns we rate 'B' or 'B-' tend to be concentrated in Middle Africa. We expanded our rating universe in the region when we assigned 'B-/B' ratings to the Republic of Chad in October 2024.

Our positive rating actions were concentrated in West Africa:

• We upgraded five sovereigns by one notch (Benin, Cameroon, Cape Verde, Cote d'Ivoire, Congo-Brazzaville);
• We revised our outlook to positive from stable on four (Egypt, South Africa, Togo, Morocco);
• We maintained a positive outlook after upgrading one sovereign (Benin); and
• We assigned one negative outlook (to Senegal) and lowered our foreign currency rating on Kenya by one notch to 'B-'.

We revised to positive our outlooks on Benin, Morocco, and South Africa and maintained our positive outlook on Egypt. We revised our outlook on Togo to positive in September and maintained it in our October publication. None of our rating actions were related to election outcomes. South Africa's positive outlook is underpinned by the potential acceleration of its reform agenda, which could spur economic growth and support public finances. Elections were held in almost half of our rated sovereigns in 2024 leading to some shifts in the political landscapes in Botswana, Ghana, Mauritius, Senegal, and South Africa and lingering protests in Mozambique.

That said, we took a few negative rating actions on local currency ratings. We lowered by one notch to 'CCC' our long-term local currency rating on Mozambique in October because of liquidity strain (note that on Feb. 19, 2025, we lowered our local currency sovereign credit rating on Mozambique to 'CCC-' and revised the outlook on the local currency and foreign currency ratings to negative from stable).

Following Congo-Brazzaville's completion of its domestic debt exchange in November 2024, we raised our local currency rating to 'CCC+' with a stable outlook, from 'SD' (selective default).

Table 1

Ghana and Zambia made progress in their debt restructuring journeys after reaching agreements with their respective Eurobond holders. That said, they are yet to reach a deal with their commercial creditors on the totality of their commercial debt. Nonetheless, our long-term local currency rating on both is 'CCC+' with a stable outlook. This balances the IMF's funding assistance against risks associated with their borrowing needs amid constrained financing conditions in their domestic capital markets.

Africa's economic growth should remain resilient

Most of the continent's economies' growth trajectories proved resilient in 2024, shedding just 20 basis points (bps) on average compared to 4.55% growth in 2023 (see chart 1). Despite volatile geopolitical dynamics we expect average GDP growth to rise by 43 bps to 4.78% in 2025, still below the 5.5% average recorded in 2017 among our rated sovereigns.

Chart 1

The Eurobond market came back to life in 2024, at a price

Benin, Cote d'Ivoire, and Kenya were the first sovereigns to re-enter the Eurobond market early in 2024 after a hiatus of nearly two years because of high global interest rates. While Kenya used the proceeds to partially refinance its 2014 Eurobond, Benin and Cote d'Ivoire tapped the market to finance infrastructure projects. Senegal completed the private placement of two tranches at a lower yield (average of 7.04%) than Cameroon (10.75%), benefitting from a currency swap. Furthermore, Benin managed to re-enter the market in January 2025 at a lower coupon of 6.48% thanks to a dollar-euro hedge.

Despite the U.S. Federal Reserve's third rate cut in December 2024, to 4.5%, South Africa and Nigeria's issuances came at a price. They issued a total of $3.5 billion and $1.7 billion, respectively, in the last quarter of 2024. Despite both being oversubscribed, yields remained high for Nigeria, which will pay close to 10% for its 6.5-year maturity and above 10% for its 10-year bond. South Africa will pay 7% and close to 8% but for longer tenors (12 and 30 years).

Angola was the last sovereign to issue in the market in 2024 with a $1.2 billion drawdown from its medium-term note program with a coupon above 10%. Following three consecutive rate cuts, Angola's 10-year U.S. Treasury note ended the year almost 40 bps higher than a year earlier, at 4.39%, according to Statista.

Chart 2

In 2024, Ghana and Zambia's bondholders agreed to the new terms of their Eurobonds, totaling $13 billion and $3 billion in outstanding restructured notes, respectively.

Many non-sovereign entities are trending positively amid resilient creditworthiness

Most of our non-sovereign ratings were broadly split above and below 'BB-' and remained unchanged in 2024. Our non-sovereign rating universe spreads across our rating scale with about 60% of issuers rated 'BB-' and above, while the balance is anchored at 'B-' (see chart 3). This is largely skewed by Nigerian and Egyptian financial institutions, which ratings are affected by the macroeconomic challenges in their respective economies. At the same time, we revised the outlooks on some South African banks on the back of a similar action on the sovereign and a Moroccan bank on its resilient performance (see chart 4).

Chart 3

Chart 4

Multilateral lending institutions (MLIs) display strong credit quality

Policy mandates and strong balance sheets drive Africa-based MLIs. Our ratings on them are in the upper investment-grade category and range between 'A' and 'AAA' (see table 2). We assigned for the first time our 'A' long-term and 'A-1' short-term credit ratings to East African Development Bank in December 2024. Our outlook on Arab Bank for Economic Development in Africa (BADEA) remains positive, having been revised from stable in September 2023. Our ratings on development financial institutions are generally tied to their respective sovereigns because we see their role for and link with the state as integral, which underpins our view of an almost certain likelihood of government support.

Table 2

Sovereign ratings heavily influence financial services ratings

We revised our outlooks on some of our rated banks in Egypt, Morocco, and South Africa to reflect the same action on their sovereigns (see chart 5). In South Africa, we view the creditworthiness of some banks as higher than the sovereign's. As such, any upward movement in the sovereign rating triggers a similar change to our ratings on the banks. One of our rated Egyptian banks is also in this situation. For two other Egyptian banks, we have also taken a positive rating action after the same action on the sovereign because, in our view, a sovereign upgrade could lower risk on banks' balance sheet. Egyptian banks are indeed highly exposed to their sovereign--through securities and loans--accounting for about 56% of assets as of June 2024. Some of the Nigerian banks are also constrained by the sovereign ratings but holdings of government securities in the system averages around 10%. Finally, Tunisian banks' exposure to their sovereign has been on an upward trend over the past decade, increasing the link between banks' and sovereign creditworthiness.

Chart 5

Chart 6

Half our rated African banks are in Nigeria and Egypt. This tilts the rating distribution toward 'B–' (see chart 6). Despite macroeconomic instability stemming from currency adjustments and high inflation, Nigerian banks' intrinsic creditworthiness has been resilient through the cycle amid muted risk appetites and good profitability.

Our South African rated insurers and reinsurers' credit metrics remained resilient in 2024. Many are subsidiaries of European insurance groups that operate in South Africa and benefit from parent support. They are rated above the sovereign either because of group support or they withstand our sovereign stress test on South Africa. Equally, we affirmed our ratings on domestic life insurers above the foreign currency sovereign ratings because of their strong loss absorption capacity in case of a sovereign stress and revised our outlook on their global scale ratings to positive. The majority of insurers in South Africa are rated at the South African government national scale rating (see Appendix). Therefore, the rating distribution of insurers tends to compare better than that for banks in Africa (see charts 7 and 8).

Chart 7

Chart 8

We assigned our first fund credit quality ratings (FCQR), using our national scale mapping, to money market and fixed income funds in South Africa. Ratings range between the 'AA' and 'AAA' categories and are preceded by the prefix 'za' to identify the South Africa national scale rating and the suffix 'f' to identify our FCQR. The funds' sponsor is a subsidiary of Nedbank Group Ltd. and is separated from the operations of the banking entity Nedbank Ltd.

Corporates saw a broadly stable credit trend supported by domestic demand

Our rating distribution is skewed toward 'BB-' and above because more than two thirds of the corporates we rate are based in South Africa (see chart 10). South African corporates' creditworthiness is mostly in line with or stronger than our South Africa sovereign ratings. The resilient economy underpins the stability of our ratings, notably in the telecoms sector. Following our outlook revision to positive for South Africa, we revised our outlooks on only four South African government-related entities (utilities operating in the electricity, water, and telecommunications sectors) where their creditworthiness is constrained by or linked to that of the sovereign (see chart 9). Our corporate ratings remained mostly unchanged in 2024, despite softer commodity prices and lower demand. We revised our outlook to negative from stable on one mining company to reflect short-term refinancing risk in the context of a weak diamond market. We assigned for the first time our 'B' ratings, with a stable outlook, to pan-African telecommunications operator Africell Holdings Limited (B/Stable) and a southern Africa-based midsize copper mine Ivanhoe Mines Ltd.

Chart 9

Chart 10

2025 carries many uncertainties

Geopolitical and trade tensions are currently heightened and could weigh on inflation outlooks and the pace of normalization of central banks' monetary policies. The market access and opportunities that African sovereigns experienced in 2024 and early 2025 might be short-lived. Despite some electoral upsets for incumbent political parties (Botswana, Mauritius, Senegal, and South Africa), none of the elections in six of our rated sovereigns led to any rating actions. Presidential elections are expected in Burkina Faso, Cameroon, and Cote d'Ivoire in 2025. Risks stemming from political fragmentation in ECOWAS (Economic Community of West African States) and insecurities linked to militant groups in the Sahel, Nigeria, Cameroon, and Chad could destabilize the sub-region. Equally, regional tensions in the Kivu region could undermine credit metrics of both the Democratic Republic of Congo and Rwanda.

Appendix: Global and National Scale Rating Lists

Table 3

Table 4

Glossary:

CreditWatch: Highlights our opinion regarding the potential direction of a short-term or long-term rating. It focuses on identifiable events and short-term trends that cause ratings to be placed under special surveillance by S&P Global Ratings' analytical staff.

Issuer credit ratings: An S&P Global Ratings' issuer credit rating is a forward-looking opinion about an obligor's overall creditworthiness. This opinion focuses on the obligor's capacity and willingness to meet its financial commitments as they come due.

Fund credit quality ratings: Also known as a "bond fund rating," it is a forward-looking opinion about the overall credit quality of a fixed-income investment fund. Fund credit quality ratings, identified by the 'f' suffix, are assigned to fixed-income funds, actively or passively managed, typically exhibiting variable net asset values.

Local and foreign currency ratings: S&P Global Ratings' issuer credit ratings make a distinction between foreign currency ratings and local currency ratings. A foreign currency rating on an issuer can differ from the local currency rating on it when the obligor has a different capacity to meet its obligations denominated in its local currency versus obligations denominated in a foreign currency.

National scale rating: An opinion of an obligor's creditworthiness or overall capacity to meet specific financial obligations, relative to other issuers and issues in a given country or region.

Outlook: An S&P Global Ratings' outlook assesses the potential direction of a long-term credit rating over the intermediate term, which is generally up to two years for investment grade and generally up to one year for speculative grade. In determining a rating outlook, consideration is given to any changes in economic and/or fundamental business conditions.

Related Research

• M23 Fighting Could Harm Credits Metrics Of Both Democratic Republic Of Congo And Rwanda, Feb. 6, 2025
• Sovereign Ratings List, Jan. 13, 2025
• Sovereign Ratings History, Jan. 13, 2025
• Global Sovereign Rating Trends 2025: Geopolitical Risk Is The Biggest Threat To Credit Quality, Dec. 24, 2024
• Sovereign Risk Indicators, Dec. 9, 2024
• Various Rating Actions Taken On Four South African Corporate And Infrastructure Issuers On Outlook Revision To Sovereign, Nov. 22, 2024
• South African Banks Outlooks Revised To Positive On Similar Sovereign Action, Nov. 20, 2024
• Various South Africa-Based Insurer Outlooks Revised To Positive Following Similar Rating Action On The Sovereign, Nov. 20, 2024
• Ratings On Three Egyptian Banks Affirmed On Improved Operating Environment; Outlook Positive, Oct. 24, 2024