Interest payments absorb about 12 percent of government revenue in the typical sub-Saharan African country, according to the International Monetary Fund’s October 2026 estimates. That burden leaves governments with less room to finance infrastructure, energy and social services at a time when they urgently need capital for development. Limited domestic financing options and expensive external borrowing are intensifying the pressure on public finances across the region.
One structural constraint is the shallow depth of domestic capital markets. In more developed financial systems, governments can raise long-term funding by issuing bonds in their own currencies to a broad investor base. In Africa, only around 60 percent of countries had sovereign bonds outstanding at the end of 2024, the lowest share among global regions, according to the OECD. This reflects, in part, the large number of small and low-income economies across the continent. Domestic debt markets also tend to be less liquid, with shorter maturities and limited investor participation, making predictable long-term financing harder to secure.
Fragmentation across national financial markets compounds the problem. The African Development Bank has identified greater regional financial integration as essential to expanding cross-border investment and mobilising domestic savings more effectively. Although Africa holds substantial pools of savings, institutional and regulatory barriers prevent much of that capital from flowing into productive investment.
Governments can turn to domestic banks, but this creates a trade-off. IMF data show that in the median sub-Saharan African country the share of government borrowing in total bank credit rose from 20 percent in 2010 to 35 percent in 2023. Greater exposure to sovereign debt can leave less credit available to businesses and households, particularly in countries with shallow banking systems.
Direct central-bank financing is another option, yet excessive reliance on it risks fuelling inflation, weakening currencies and undermining monetary stability. As a result, many governments facing budget and external financing gaps must seek funding from international lenders and capital markets.
Access to external finance, however, comes at a high cost. Investors demand higher returns from countries perceived as carrying greater economic, political or currency risks. The OECD reported that yields on Africa’s US dollar-denominated sovereign bonds reached 9 percent in 2024, the highest level among global regions. For governments borrowing in foreign currencies, exchange-rate depreciation can further raise the domestic cost of servicing principal and interest.
The IMF remains an important source of financing for countries facing balance-of-payments pressures or limited market access. Its facilities vary: eligible low-income countries can obtain concessional loans through the Poverty Reduction and Growth Trust, while others use non-concessional arrangements. Most IMF-supported programmes also include policy conditions intended to restore stability, though these can constrain governments’ policy choices, especially when fiscal adjustment involves spending cuts.
The Democratic Republic of the Congo and Cameroon illustrate different aspects of this challenge. As of 30 September 2026, the DRC had approximately 2.43 billion Special Drawing Rights (SDR) in outstanding IMF credit, equivalent to about $3.29 billion at the IMF’s late-October exchange rate. Cameroon owed roughly 1.10 billion SDR, or about $1.49 billion. These figures represent only IMF credit, not the countries’ total public or external debt. The DRC continues to rely on IMF-supported programmes while seeking to expand investment and close infrastructure gaps. Cameroon remains at high risk of debt distress, according to the Fund’s October assessment, even though its public debt is still judged sustainable over the medium term. In both cases, the amounts owed to the IMF alone understate the broader pressure on public finances.
Reducing this dependence will require more than limiting new borrowing. Deeper domestic bond markets, broader investor participation, stronger public revenue collection and improved debt management would expand governments’ financing options. Greater regional financial integration could also help channel African savings across borders more effectively. Without such changes, many governments will continue to face a difficult choice: borrow at high cost to meet immediate needs, or constrain spending on the infrastructure and productive investment required for long-term growth.
