Debt Challenge: Nigeria, Egypt Lead List As African Countries Repay $90bn In 2026
Nigeria, Egypt, South Africa and Angola are at the forefront of Africa’s mounting sovereign debt challenge in 2026, with external repayments on track to breach $90 billion, S&P Global Ratings warns in its African Sovereign Ratings Outlook 2026. It said it could raise Nigeria’s ratings if the country’s economic momentum continues.
S&P revised Nigeria’s outlook to Positive from Stable and affirmed its ‘B-/B’ Ratings in November last year. In its latest report, it said, “We could raise our ratings over the next 12 months if Nigeria’s economic performance continues to exceed our forecasts, alongside more entrenched fiscal and external gains.”
Meanwhile, with Africa’s $90 billion repayment schedule now more than three times what it was in 2012, a looming challenge for the continent’s economic managers is balancing credit reforms with mounting financing pressures.
In its latest outlook, S&P stated that government external debt repayments are approaching a peak, noting that the continent’s hard-currency obligations are likely to exceed $90 billion this year, with Egypt accounting for nearly one-third of the total.
S&P in the report said, “We estimate principal external debt repayments of rated African sovereigns at about $90 billion in 2026. Government external debt repayments are approaching a peak and are now more than three times those in 2012.
“Nearly one-third of that amount relates to Egypt (with by far the largest debt at about $27 billion), followed by Angola, South Africa, and Nigeria. Proportionally, there’s a wide divergence across the continent in the government share of total annual debt service.
“Large increases in this share typically reflect persistent fiscal deficits and signal heightened government vulnerability to rollover risk and shifts in market sentiment. By contrast, a declining government share, aside from cases where external market access is constrained, generally indicates the presence of alternative financing sources, where domestic savings rates and domestic financing are likely more abundant. In such cases, deeper financial systems can provide governments with an alternative source of funding, although often at a high cost during periods of higher inflation and, potentially, at the expense of credit to the private sector.”
The ratings agency highlighted persistent structural vulnerabilities across sovereign balance sheets, chiefly driven by high debt loads and narrow revenue bases. “Structurally high debt and low, concentrated revenue bases will continue to pose key risks,” S&P’s analysts wrote, adding that “external vulnerabilities have also increased.”
Despite repayment pressures, S&P flagged a modest improvement in credit sentiment: average sovereign ratings across Africa have climbed to their highest levels since late 2020, reflecting reform momentum and improved growth prospects. However, the agency was at pains to stress that this uptick principally signals a stabilisation of credit metrics rather than a substantial strengthening of underlying fundamentals.
In the report, S&P noted that it expects Nigeria’s authorities to “press on with its reform packages, focusing on raising revenue through a policy mix of increased collections and efficiency gains. Commensurate with recently announced increases in budgetary borrowing, we expect that lower oil prices and increased capital expenditure will widen the 2026 fiscal deficit to at least four per cent from an estimated three per cent in 2025.
“Following an uptick in violence and U.S. strikes on Islamist targets in the north of the country toward the end of 2025, related security expenditure pressures could rise. However, increased oil production, under-execution of capital expenditure, and some gains in revenue collection (to 12 per cent of GDP) will moderate these factors.
“We understand that the government intends to fund the wider deficit primarily through domestic issuance–the country’s domestic financial system is regionally significant in size–but note this could both reduce private credit growth and maintain high borrowing costs despite falling inflation. Positively, we continue to expect the accumulation of foreign exchange reserves and a current account surplus in the region of four per cent of GDP in 2026.”
