Africa's financing landscape presents a striking paradox. The continent is home to some of the world's fastest-growing economies, abundant natural resources, and a young, entrepreneurial population. Yet, when African governments tap international capital markets, they are perceived as highly risky propositions and charged some of the world's highest borrowing costs - often hundreds of basis points above peers in Asia or Latin America.
This so-called 'Africa premium' has become one of the continent's most costly penalties. Even before the Covid-19 pandemic, African Eurobond spreads exceeded those from similarly rated emerging markets by 200 to 400 basis points.
In 2022, Ghana's 10-year Eurobond yields climbed above 12 before its default, while Latin American peers with comparable debt metrics borrowed at under 8. Nigeria's 10-year bonds continue to trade roughly 300 basis points above Brazil's, despite comparable fiscal indicators.