Moody’s Upgrades Sub-Saharan Outlook

Moody’s raised its outlook for sub-Saharan Africa to positive on Wednesday, reporting that structural economic reforms have helped nations withstand severe inflationary pressures.

The rating agency noted that robust commodity prices and improved access to international financing have significantly strengthened the region’s fiscal stability.

The agency forecasts a weighted average economic growth of 4.3 per cent for sub-Saharan Africa across both 2026 and 2027.

Moody’s expects total government debt to stabilise at 56.6 per cent of Gross Domestic Product (GDP) by 2027, down from 62.4 per cent in 2025, driven by major debt reductions in nations such as Zambia and Ethiopia.

Annual government borrowing requirements are also projected to shrink to 11.2 per cent of GDP by 2027.

Out of 25 rated nations in the region, Moody’s assigned positive outlooks to eight countries—including Nigeria, South Africa, Ghana, and Angola—while 13 remain stable and four carry negative outlooks.

Only Botswana and Mauritius retain investment-grade ratings, though Botswana faces rising debt pressures alongside Gabon due to weak diamond demand and fiscal spending challenges.

Despite the positive momentum, Moody’s warned that heavy debt service burdens continue to constrain national budgets, with Kenya and Zambia projected to spend 35 per cent of government revenue on interest payments in 2027.

The agency highlighted persistent downside risks, including security threats, climate shocks, limited revenue generation, and potential investor pullbacks from regional bond markets.