Egypt, Nigeria Lead Africa’s $90 Billion Debt Repayment Challenge

By OBIOMA TORI

AFRICA is facing a record surge in sovereign debt repayments in 2026, with Nigeria, Egypt, South Africa, and Angola accounting for the bulk of the continent’s $90 billion external obligations, according to the latest African Sovereign Ratings Outlook from S&P Global Ratings. The figure represents more than a threefold increase in repayments compared with 2012, underscoring mounting pressures on African governments to balance fiscal discipline with economic growth.

Nigeria’s Positive Outlook Amid Rising Debt

S&P revised Nigeria’s sovereign outlook to Positive from Stable in November 2025 while affirming its ‘B-/B’ rating. The agency noted that sustained economic momentum, alongside deeper fiscal and external gains, could result in a ratings upgrade over the next 12 months. Nigeria’s authorities are pursuing reforms aimed at increasing revenue collection and improving fiscal efficiency. S&P projects that the country’s fiscal deficit could widen to around four per cent of GDP in 2026, up from an estimated three per cent in 2025, primarily due to lower oil prices, increased capital expenditure, and heightened security spending in the northern regions.

Despite these pressures, Nigeria’s domestic financial system provides a significant buffer. S&P expects the government to fund much of the deficit through domestic borrowing, leveraging a relatively deep regional financial market. However, this approach may constrain private-sector credit growth and sustain high borrowing costs even in a declining inflation environment.

Egypt: The Heaviest Burden

Egypt shoulders the largest share of Africa’s external debt repayment schedule, with around $27 billion due in 2026. The country’s significant obligations highlight the structural vulnerabilities of African sovereign balance sheets, particularly where fiscal deficits persist and revenue bases are narrow. High debt loads increase exposure to rollover risk and shifts in market sentiment, making effective fiscal management critical.

South Africa, Angola, and Regional Divergence

South Africa and Angola also rank among the top African economies facing heavy debt service demands. S&P notes that the proportion of government debt in annual repayments varies widely across the continent. Countries with lower government shares often benefit from alternative financing sources, including domestic savings and broader financial systems, although high inflation and the cost of borrowing can limit the effectiveness of these mechanisms.

The agency highlights that structural vulnerabilities — including concentrated revenue streams and persistent deficits — remain a key risk factor for African economies, particularly as external liabilities rise.

Stabilisation Amid Pressure

Despite record repayment schedules, S&P observes a modest improvement in credit sentiment across Africa. Average sovereign ratings have climbed to their highest levels since late 2020, reflecting ongoing reform efforts and improved growth prospects. Analysts caution, however, that this uptick signals stabilization rather than a fundamental strengthening of financial positions.

For Nigeria, the outlook remains cautiously positive. Increased oil production, partial under-execution of capital expenditure, and gains in revenue collection — projected at around 12 per cent of GDP — are expected to mitigate some fiscal pressures. The accumulation of foreign exchange reserves and a projected current account surplus of approximately four per cent of GDP in 2026 also contribute to resilience.

Balancing Reform and Risk

Africa’s $90 billion repayment schedule underscores the challenge for policymakers: meeting external obligations while sustaining domestic growth. S&P underscores that countries must navigate financing pressures carefully, with reforms and fiscal discipline being central to maintaining market confidence. For Nigeria, Egypt, Angola, and South Africa, the balance between debt servicing, security expenditure, and growth-oriented investment will define macroeconomic stability in the coming year.