The President of the African Development Bank (AfDB), Mr Sidi Ould Tah, says more African countries are likely to regain or achieve investment-grade credit ratings by next year as reforms begin to deliver results and economic growth accelerates.
Several African sovereigns have already been upgraded in recent months, including Nigeria. However, Nigeria is not yet near investment-grade status.
In May, S&P Global Ratings upgraded Nigeria’s sovereign credit ratings to ‘B’ with a stable outlook, citing structural reforms under President Bola Tinubu and key drivers like higher oil production and improved fiscal revenue.
The country is still five notches from investment-grade. Under S&P’s rating scale, the progression follows— B → B+ → BB- → BB → BB+ → BBB- (investment grade).
S&P raised Morocco to investment grade last year and increased South Africa by one level to BB in November. Ghana, Zambia, the Ivory Coast and Kenya have also benefited from positive rating action linked to fiscal, debt and economic reforms.
“We’re quite confident that the continent will continue to grow very strongly and that African countries will be better rated in the coming years,” Mr Ould Tah said in an interview with Bloomberg.
“We’ve seen Morocco receive investment grade during the last few months, and we expect other countries by next year to get toward that,” he added.
The outlook reflects improving fiscal positions and reforms implemented across countries on the continent, even as the conflict in the Middle East threatens to slow economic growth and raise costs for energy-importing nations. Better credit ratings can help countries borrow at lower rates and fund development projects.
The AfDB projects the continent’s gross domestic product expansion will accelerate to 4.4 per cent next year, if the conflict in the Middle East does not extend for a longer period. It expects the continent to slow to 4.2 per cent this year.
The war in Iran has benefited oil producers such as Nigeria, Angola and Gabon, while exerting pressure on the fiscal positions of net energy importers such as South Africa, Kenya, Ghana and Senegal.
Mr Ould Tah said the bank is ready to support countries facing budget constraints and high debt burdens due to the impact of the Iran crisis, including increasing credit lines to them.
“The board of directors of the bank will examine in the coming days how the bank can increase the volume of resources it will provide to its member countries in this specific situation,” he said.
