OPINION: African countries are bad at issuing bonds, so debt costs more than it should: what needs to change.
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GUEST - Dr Misheck Mutize - Lead expert on credit rating agencies at AU’s African Peer Review Mechanism (APRM)
Over the past two decades, African countries have increasingly turned to international capital markets to meet their development financing needs. For example, Kenya and Benin raised a combined US$2.5 billion through bond issuances during the first half of 2025. Proceeds were used to repay maturing bonds. This means new bonds, with unfavourable terms, are being issued to pay previous lenders. Yet African bonds are substantially mispriced, resulting in excessively high yields that are not justified by fundamentals – based on economic, fiscal and institutional strengths.
Mispricing occurs when a country has high economic growth, stable institutions that support government policy implementation, rule of law and accountability, yet its bonds trade at higher yields than those of its peers. In other words, there will be every reason for investors to trust that the country will repay what it owes, but they still expect a higher return. This is happening because of lack of information and biases perpetuated by global entities that are facilitating bond sells in Africa.
Over the past two decades, African countries have increasingly turned to international capital markets to meet their development financing needs. For example, Kenya and Benin raised a combined US$2.5 billion through bond issuances during the first half of 2025. Proceeds were used to repay maturing bonds. This means new bonds, with unfavourable terms, are being issued to pay previous lenders. Yet African bonds are substantially mispriced, resulting in excessively high yields that are not justified by fundamentals – based on economic, fiscal and institutional strengths.
Mispricing occurs when a country has high economic growth, stable institutions that support government policy implementation, rule of law and accountability, yet its bonds trade at higher yields than those of its peers. In other words, there will be every reason for investors to trust that the country will repay what it owes, but they still expect a higher return. This is happening because of lack of information and biases perpetuated by global entities that are facilitating bond sells in Africa.