Snapshot

Across Africa, a new borrowing wave is unfolding, driven by optimism in global markets and a false sense of relief from easing interest rates. As major economies cut rates and liquidity returns, finance ministries from Abuja to Luanda are reopening Eurobond programs and reviving sovereign borrowing. Nigeria’s $2.8 billion global issuance, including its first-ever sukuk, and Angola’s $1.5 billion Eurobond debut exemplify the renewed appetite for African risk.

Yet this resurgence conceals a deeper structural weakness: Africa’s persistent reliance on foreign currency. According to the Atlantic Council (2025), over 70% of public external debt is denominated in U.S. dollars, meaning that every shift in the greenback’s value translates directly into fiscal turbulence.

For now, Africa enjoys short-term relief. The U.S. dollar’s recent decline, weighed down by expanding fiscal deficits and uncertainty under the Trump administration, has eased repayment pressures. Meanwhile, gold’s record surge beyond $4,000 per ounce has bolstered resource-backed economies like Ghana, Mali, and South Africa, strengthening their reserves and currencies. But these are temporary tailwinds, not structural safeguards. Africa’s balance sheets remain vulnerable to external cycles. When the dollar strengthens again or global risk sentiment tightens, debt-service burdens will surge, exposing once more the continent’s fragile monetary sovereignty.

The real challenge lies not in access to credit but in anchoring value. The continent’s fiscal strategy must shift from debt-fueled consumption to currency resilience and productive capacity. That means developing local-currency bond markets, investing in export-transformative sectors like energy, logistics, and manufacturing, and building credible monetary frameworks to stabilize exchange rates.

Equally vital is regional cooperation. Mechanisms such as Afreximbank’s Pan-African Payment and Settlement System (PAPSS) can reduce dollar dependency by enabling trade settlement in local currencies. Strategic borrowing, linked to productivity rather than fiscal deficits, should become the new norm.

2025 presents a pivotal opening. With softer U.S. yields, elevated commodity prices, and renewed investor optimism, Africa has a fleeting opportunity to rebuild buffers and strengthen currencies. But if this liquidity wave is used merely to refinance old debt or fund recurrent expenditure, the cycle of dependence will deepen.

According to Argon Africa’s Economic Analyst; “The continent’s next phase of growth will be defined not by access to foreign credit, but by the strength of its currencies. Debt may extend time, but only value preserves independence.”