Africa Is Turning Its Strategic Assets Into Leverage for Cheaper Global Capital

The yield on the 10-year U.S. Treasury reached 5.34% on October 1, its highest since 2002, after its biggest quarterly increase this century. The move has made dollar financing more expensive across international debt markets.

African sovereigns borrowing in those markets pay the Treasury rate plus a spread demanded by investors.

That spread can differ sharply between countries, putting some governments well above an already elevated U.S. benchmark when they issue debt.

African Development Bank President Sidi Ould Tah raised concerns about how some of that risk is assessed at an S&P emerging-markets conference in London on October 1.

He said poor data and limited transparency contribute to perceptions of higher risk in Africa.

The AfDB plans to work through the African Legal Support Facility to help governments prepare more effectively for sovereign credit ratings.

Ratings agencies maintain that they apply the same methodologies across countries. Only three of Africa’s 54 countries currently hold investment-grade ratings.

The AfDB initiative will give governments more support in presenting the information used in those assessments, while their debt and broader financial position will continue to influence what investors demand to lend.

Credit Ratings Are Widening the Gap Between African Borrowers

Côte d’Ivoire’s dollar bonds were yielding about 6.7% on average at the end of September.

Kenya’s were around 8.5%, with its 2036 Eurobond yielding 9.09% on September 24 as Nairobi prepared to raise another $815 million internationally. S&P rates Côte d’Ivoire BB and Kenya B.

The IMF assesses Côte d’Ivoire at moderate risk of debt distress, and the government has continued to tap international markets while reducing its fiscal deficit.

Kenya is carrying larger repayments after public debt increased over the past decade. At least $500 million of the new financing is expected to replace more expensive external debt.

Senegal was trading at a very different level by the end of September, with average Eurobond yields above 26%.

Public debt had reached about 130% of GDP after previously unreported liabilities came to light. S&P cut the country’s foreign-currency rating to CC as Dakar prepared to restructure its debt, warning that foreign creditors were likely to take losses.

The undisclosed debt had already derailed Senegal’s previous IMF programme and pushed the government toward heavier borrowing in the regional market.

Its 2026 budget deficit forecast was raised to 7.6% of GDP in September, with government revenue coming in weaker than expected and debt service taking a larger share of available resources.

Global Demand for Africa’s Minerals Is Giving Governments New Leverage

The U.S. International Development Finance Corporation has closed financing for the Lobito Atlantic Railway, which links Angola’s Atlantic coast with the copper-producing regions of the Democratic Republic of Congo and Zambia.

DFC expects the railway to carry as much as 4.6 million metric tons and reduce critical-mineral transport costs by up to 30%.

The U.S. and European Commission are supporting further development of the corridor as they seek new supply chains for minerals from the region.

The African Development Bank presented five regional critical-mineral projects to Korean investors in September. Financing presented with the projects included guarantees from the AfDB and co-financing with other institutions.

The bank later agreed with the Export-Import Bank of Korea to work on financing for mineral processing and related infrastructure.

Africa holds about 30% of the world’s critical-mineral deposits, according to the AfDB, which estimates that roughly $8.6 trillion of the continent’s mineral resources remain undeveloped.

The bank projects higher global demand for lithium, copper and platinum-group metals through 2040.

African ministers meeting at an AfDB forum in July called for processing to take place closer to where the minerals are mined.

They also backed regional value chains that would keep more of the activity created by extraction within African economies as countries negotiate new projects with foreign investors.

Keeping More Mineral Value in Africa Can Strengthen Its Position With Creditors

Copper provides most of Zambia’s export earnings, and the government wants annual production to reach 3 million tonnes by 2031.

Mines that had stalled are returning to production as new investment enters the sector. Zambia is also seeking to process more of its output domestically rather than send the additional production abroad in less-processed form.

The Democratic Republic of Congo is pursuing domestic processing as production expands across its copper and cobalt industry.

Its minerals can also move west through Angola on the Lobito route, giving Angola a role in the trade through its railway and Atlantic ports.

The African Development Bank projects that mineral processing and battery manufacturing could add $32 billion to Africa’s annual exports and $24 billion to GDP. The forecast depends on projects and industrial capacity that have yet to be developed.

Higher copper production gives Zambia more export capacity when the additional output reaches international markets.

Processing done inside mineral-producing countries keeps more of the commercial activity within their economies, including taxable income and export revenue.

Those figures form part of the fiscal and external accounts examined in sovereign credit assessments, alongside government debt and repayment capacity.

Africa Has More Leverage Over Its Risk Premium Than Global Rates

Competition for Africa’s strategic minerals is bringing new negotiations over where processing takes place and what infrastructure is built around production.

Governments are seeking a larger share of that investment at home as foreign demand for the continent’s resources grows.

The financial impact will depend on what those projects leave in the economies where the minerals are produced.

Processing and related industries can add to exports and government revenue, while new foreign-exchange earnings can strengthen the external accounts followed by creditors.

The evidence will emerge as projects begin operating and governments report their results. Export receipts, reserves and fiscal revenue will provide part of that record.

Sovereign bond spreads will provide another when countries return to international markets for financing.

Those figures will show whether competition for Africa’s strategic assets is being converted into stronger borrowing positions for the governments negotiating the investment.