Finance
IMF highlights risks of domestic borrowing in sub-Saharan Africa
Sub-Saharan African governments are paying more to borrow at home than abroad as they turn increasingly to domestic banks to plug financing gaps, deepening risks for lenders and squeezing private investment, the International Monetary Fund said on Thursday. “The domestic cost of capital remains elevated across the region,” the IMF said in its Regional Economic Outlook, which was released during the annual meetings of the global lender and World Bank in Washington. Local financial markets are underdeveloped – characterized by shallow depth, fragmentation, illiquidity and high transaction costs and lending spreads.” The IMF warned that new domestic public borrowing is “significantly more expensive than external borrowing” in many countries. Heavy reliance on banks is raising funding costs further and “crowding out private-sector investment.” Domestic bank holdings of sovereign debt are “large and growing faster in sub-Saharan Africa than in the rest of the world,” it added, creating a “vicious potential feedback loop” in which weakening government finances threaten banks’ soundness, curbing credit and heightening fiscal stress.
Abebe Selassie, at his briefing on Africa said “six months ago, our assessment highlighted the region’s strong policy efforts and that growth had exceeded expectations in 2024. But we also noted a sudden realignment of global priorities and increasingly turbulent external conditions—marked by weaker demand, softer commodity prices, and tighter financial markets. Today, these global headwinds continue to test the region’s recovery and resilience. Sub-Saharan Africa’s economic growth is projected to hold steady at 4.1 percent in 2025, with a modest pickup expected in 2026. This reflects ongoing progress in macroeconomic stabilization and reform efforts across key economies. Several countries—Benin, Côte d’Ivoire, Ethiopia, Rwanda, and Uganda—are among the world’s fastest-growing. However, resource-intensive, and conflict-affected countries continue to face significant challenges, with only modest gains in income per capita.
The external environment remains challenging. Global growth is slowing, and commodity prices are diverging. Oil prices are declining, while prices for cocoa, coffee, copper, and gold remain elevated.
“External financing terms have improved somewhat, allowing a few countries, notably Kenya and Angola most recently, to access international capital markets. The global trade policy and aid landscape has also deteriorated. Tariffs on exports to the United States have increased, and preferential access under the African Growth and Opportunity Act has expired. While the direct exposure is relatively modest for most countries in the region, broader trade policy uncertainty is weighing on growth.
The projected sharp decline in foreign aid leaves several lower-income and fragile economies particularly exposed. Affected governments have sought to reallocate budgetary resources but with limited fiscal space, they have limited room for maneuver. It is encouraging to see the region showing remarkable resilience. Although this will continue to be tested in the coming months. Pressure points include; rising debt service costs, which are crowding out development spending; a shift toward domestic financing that is deepening the sovereign-bank nexus; inflation that has eased at the regional level but remains in double digits in about one-fifth of the region, and; external buffers that are under pressure and need to be rebuilt.
Against this difficult backdrop, our October 2025 Regional Economic There is significant potential for countries in the region to raise revenues through comprehensive tax policy reforms and improved tax administration. This includes modernizing tax systems through digitalization, streamlining inefficient tax expenditures, and strengthening enforcement via targeted compliance strategies. However, these efforts must go beyond technical adjustments. It will be essential to build public trust in tax institutions, strengthen institutional capacity, and conduct careful impact assessments—including distributional analysis—to ensure that reforms are both effective and equitable. Enhancing debt transparency and strengthening public financial management can help reduce borrowing costs and unlock innovative financing. Publishing comprehensive debt data and reinforcing budget oversight are key steps forward.
These priorities are critical for building resilience and supporting inclusive, sustainable growth across sub-Saharan Africa. The IMF remains committed to supporting the region. Since 2020, we have disbursed nearly $69 billion, including about $4 billion so far this year. Our capacity development efforts also remain substantial, with sub-Saharan Africa as the largest recipient.
Abebe Aemro Selassiesaid that the shift to local funding was a double-edged sword. “About half of total public debt is owed to domestic banks,” he said. “Access to external financing has not been readily available in recent years, but it is also a positive sign because, fundamentally, we want countries to be able to borrow in their own currency.” Still, he cautioned that excessive domestic borrowing “can also create problems in the banking sector” if governments struggle to service debt. African countries have been very cautiously returning to international markets since 2024, after many were effectively locked out in 2022 due to a surge in borrowing costs and increased economic risks. The cost of borrowing has fallen from crisis highs, but many governments are still servicing past debts and seeking to avoid new debt traps.
Policymakers are now experimenting with a mix of domestic bond issuance, private placements, and multilateral loans to fund budgets and development projects. Beyond fiscal repair, the IMF called for stronger debt-management frameworks and credible, transparent data to attract long-term investment. It also urged more realistic expectations for “innovative” funding models such as blended-finance vehicles and debt-for-development swaps. Total blended-finance flows to sub-Saharan Africa remain small – about $6 billion per year, the report found. Transactions such as Ivory Coast’s 2024 debt-for-education swap and Gabon’s 2023 debt-for-nature swap are still rare and “comparatively small, typically below $1 billion per year globally.” Selassie said mobilizing private and domestic resources would be vital as aid declines.
Finance
Afreximbank successfully closed its second Samurai Bond transactions, raising JPY 81.8bn or $527m
African Export-Import Bank said it has successfully closed its second Samurai bond transaction, securing a total of JPY 81.8 billion (approx. USD 527 million) through Regular and Retail Samurai Bonds offerings.
The execution surpasses the Bank’s 2024 debut issuance size, attracting orders from more than 100 institutional and retail investors, marking a renewed demonstration of strong Japanese investor confidence in the Bank’s credit and its growing presence in the yen capital markets.
On 18 November, Afreximbank priced a JPY 45.8 billion 3-year tranche in the Regular Samurai market following a comprehensive sequence of investor engagement activities leveraging Tokyo International Conference on African Development (TICAD9), including Non-Deal Roadshows (NDRs) in Tokyo, Kanazawa, Kyoto, Shiga and Osaka, a Global Investor Call, and a two-day soft-sounding process which tested investor appetite across 2.5-, 3-, 5-, 7-, and 10-year maturities.
With market expectations of a Bank of Japan interest rate increase, investor demand concentrated in shorter tenors, resulting in a focused 3-year tranche during official marketing.
The tranche attracted strong participation from asset managers (22.3%), life insurers (15.3%), regional corporates, and high-net-worth investors (39.7%).
Concurrently, Afreximbank priced its second Retail Samurai bond on 18 November, a JPY 36.0 billion 3-year tranche, more than double the inaugural JPY 14.1 billion Retail Samurai issuance completed in November 2024.
The 2025 Retail Samurai bond also marks the first Retail Samurai bond issued in Japan in 2025.
Following the amendment to Afreximbank’s shelf registration on 7 November 2025, SMBC Nikko conducted an extensive seven-business-day demand survey through its nationwide branch network, followed by a six-business-day bond offering period.
The offering benefited from strong visibility supported by Afreximbank’s investor engagement across the country, including the Bank’s participation at TICAD9, where Afreximbank hosted the Africa Finance Seminar to introduce Multinational Development Bank’s mandate in Africa and its credit profile to key Japanese institutional investors.
MBC Nikko Securities Inc. acted as Sole Lead Manager and Bookrunner for both the Regular and Retail Samurai transactions. Chandi Mwenebungu, Afreximbank’s Managing Director, Treasury & Markets and Group Treasurer, commented:
“We are pleased with the successful completion of our second Samurai bond transactions, which marked a significant increase from our inaugural Retail Samurai bond in 2024, and which reflect the growing depth of our relationship with Japanese investors.
The strong demand, both in the Regular and Retail offerings, demonstrates sustained confidence in Afreximbank’s credit and mandate.
We remain committed to deepening our engagement in the Samurai market through regular investor activities and continued collaboration with our Japanese partners.”
Ecobank Nigeria, a member of Africa’s leading pan-African banking group, has announced the launch of the Ecobank SME Bazaar—a two-weekend festive marketplace designed to celebrate local creativity, empower entrepreneurs, and give Lagos residents a premium shopping experience this Detty December. The Bazaar will hold on 29–30 November and 6–7 December at the Ecobank Pan African Centre (EPAC), Ozumba Mbadiwe Road, Victoria Island, Lagos. Speaking ahead of the event, Omoboye Odu, Head of SMEs, Ecobank Nigeria, reaffirmed the bank’s commitment to supporting small and medium-sized businesses, describing them as the heartbeat of Nigeria’s economy. She explained that the Ecobank SME Bazaar was created to enhance visibility for entrepreneurs, expand market access, and support sustainable business growth.
According to her, “This isn’t just a market—it’s a vibrant hub of culture, commerce, and connection. From fresh farm produce to trendy fashion, handcrafted pieces, lifestyle products, and delicious food and drinks, the Ecobank SME Bazaar promises an unforgettable experience for both shoppers and participating SMEs. Whether you’re shopping for festive gifts, hunting for unique finds, or soaking in the Detty December energy, this is the place to be.” Ms. Odu added that participating businesses will enjoy increased brand exposure, deeper customer engagement, and meaningful networking opportunities—making the Bazaar a strong platform for both festive-season sales and long-term business growth. The event is powered by Ecobank in partnership with TKD Farms, Eko Marche, Leyyow, and other SME-focused organisations committed to building sustainable enterprises.
The Central Bank of Nigeria (CBN) has said that16 banks have so far met the new capital requirements for their various licences, some four months before the March 31, 2026 deadline. The apex bank also indicated that 27 other banks have raised capital through various methods in one of the most extensive financial sector reforms since 2004. Addressing journalists at the end of the Monetary Policy Committee (MPC) meeting in Abuja, CBN Governor Mr Olayemi Cardoso said the banking recapitalisation was going on orderly, consistent with the regulator’s expectations. He said, “We are monitoring developments, and indications show the process is moving in the right direction.” Nigeria has 44 deposit-taking banks, including seven commercial banks with international authorisation, 15 with national authorisation, four with regional authorisation, four non-interest banks, six merchant banks, seven financial holding companies and one representative office.
Cardoso explained that eight commercial banks had met the N500 billion capital requirement as of July 22, 2024, rising to 14 by September of the same year. The number has now increased to 16 as the industry continues to race toward full compliance. He said that the reforms would reinforce the resilience of Nigerian banks both within the country and across the continent. “We are building a financial system that will be fit for purpose for the years ahead. Many Nigerian banks now operate across Africa and have been innovative across different markets. These new buffers will better equip them to manage risks in the multiple jurisdictions where they operate,” Cardoso said. According to him, the reforms would strengthen the financial sector’s capability to support households and businesses. He said, “Ultimately, this benefits Nigerians—our traders, our businesses and our citizens—who operate across those regions. “It should give everyone comfort to know that Nigerian banks with deep local understanding are present to support them. Commercial banks are also creating their own buffers through the ongoing recapitalisation.”
He added that the apex bank considered several factors in determining the new capital thresholds, including prevailing macroeconomic conditions, stress test results and the need for stronger risk buffers. He reassured on the regulator’s commitment to strict oversight as the consolidation progresses. “We will rigorously enforce our ‘fit and proper’ criteria for prospective new shareholders, senior management, and board members of banks, and proactively monitor the integrity of financial statements, adequacy of financial resources, and fair valuation of banks’ post-merger balance sheets,” Cardoso said. He said the CBN remained confident that the banking system would emerge stronger at the conclusion of the recapitalization exercise, with institutions better prepared to support Nigeria’s economic transformation Banks have up till March 31, 2026 to beef up their minimum capital base to the new standard set by the apex bank. Under the new minimum capital base, CBN uses a distinctive definition of the new minimum capital base for each category of banks as the addition of share capital and share premium, as against the previous use of shareholders’ funds.
While most banks have shareholders’ funds in excess of the new minimum capital base, their share premium and share capital significantly fall short of the new minimum definition. The CBN had in March 2024 released its circular on review of minimum capital requirement for commercial, merchant and non-interest banks. The apex bank increased the new minimum capital for commercial banks with international affiliations, otherwise known as mega banks, to N500 billion; commercial banks with national authorisation, N200 billion and commercial banks with regional license, N50 billion. Others included merchant banks, N50 billion; non-interest banks with national license, N20 billion and non-interest banks with regional license will now have N10 billion minimum capital. The 24-month timeline for compliance ends on March 31, 2026. Under the guidelines for the recapitalisation exercise, banks are expected to subject their new equity funds to capital verification before the clearance of the allotment proposal and release of the funds to the bank for onwards completion of the offer process and addition of the new capital to its capital base. The CBN is the final signatory in a tripartite capital verification committee that included the Securities and Exchange Commission (SEC) and the Nigeria Deposit Insurance Corporation (NDIC). The committee is saddled with scrutinising new funds being raised by banks under the ongoing banking sector recapitalisation exercise.
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