Africa Is Earning More Dollars but Paying a Higher Price to Stay Dollar-Dependent

The cost of raising dollars has moved higher across global markets, with the U.S. 10-year Treasury yield reaching 5.34% last week, its highest since 2002.

African governments entering international debt markets are borrowing above that benchmark at a time when refinancing requirements and infrastructure spending continue to compete for public revenue.

Commodity exports are supplying more foreign exchange. Oil above $100 a barrel has increased the value of shipments from Nigeria and Angola, while high gold prices have strengthened receipts for producers including Ghana and South Africa.

Zambia and the Democratic Republic of Congo remain heavily exposed to copper, whose export earnings provide an important source of hard currency for both economies.

Nigeria’s current-account surplus reached $5 billion in the first quarter and foreign reserves stood at $51.9 billion at the end of July.

Those balances sit alongside external debt payments and demand for imported machinery, fuel and other goods needed across the economy.

Similar financing pressures extend beyond Nigeria as governments seek foreign capital for power, transport and industrial investment.

The gap between commodity earnings and financing costs is widening the focus on how Africa is priced in global markets.

Investors can earn 5.34% from U.S. government debt before taking on additional sovereign risk elsewhere, while African economies continue to depend on external financing for projects intended to expand domestic production.

Higher commodity receipts have strengthened foreign-exchange positions in several exporting countries without making international capital cheaper.

Commodity Wealth Is Not Lowering Africa’s Risk Premium

Nigeria, Angola, Ghana and Zambia remain below investment grade even as higher commodity prices support export revenue from oil, gold, cocoa and copper.

The Democratic Republic of Congo, one of the world’s largest sources of cobalt and copper, also remains below investment grade.

Sovereign assessments are based on government revenue, reserves and debt obligations rather than the estimated value of mineral deposits underground.

The African Development Bank launched a programme on October 1 to help African governments prepare for sovereign rating reviews and improve the economic information available to rating agencies.

The bank is also working to bring natural capital into measures of national wealth, including resources that have traditionally received limited recognition in economic assessments.

Zambia provides a current test as copper dominates its merchandise exports and the government rebuilds access to international finance after the 2020 default.

The country reached restructuring agreements with official creditors and Eurobond holders, while new mining investment is targeting higher copper production. Its sovereign rating remains below investment grade.

Borrowing costs remain considerably higher than returns on U.S. government debt. Nigeria returned to the Eurobond market in 2025 with dollar bonds carrying coupons of 8.63% and 9.13%, while Angola paid 9.25% when it raised $1.75 billion.

Africa’s Dollar Earnings Are Being Absorbed Before They Finance Growth

Ghana’s merchandise exports reached $18.28 billion in the first half of 2026, up 32.5% from a year earlier, as gold contributed $12.50 billion and cocoa $2.29 billion.

The country spent $9.48 billion on imports during the period, but the trade balance narrowed later in the year.

In August, imports reached $1.88 billion against exports of $1.79 billion, with gross international reserves at $11.07 billion.

Zambia earned $4.1 billion from exports in the first quarter, with copper contributing $2.9 billion.

Mining expansion is also adding to demand for imported machinery and equipment as producers invest in new capacity, requiring part of the foreign exchange earned from copper to return abroad through purchases needed for production.

Kenya’s July import bill reached KSh338.8 billion, almost twice the KSh170.3 billion earned from exports that month.

Mineral fuels accounted for KSh108.6 billion and machinery and transport equipment for KSh72.7 billion, while food imports cost KSh17.9 billion.

The figures capture both the energy bought to keep the economy running and the equipment required for new production.

Large funding needs remain in electricity, where about 560 million people in Sub-Saharan Africa were still without access in 2024.

Mission 300 has secured more than $50 billion in pledges from development-finance partners toward connecting 300 million people by 2030.

Under the first 36 national energy compacts, private investors are expected to provide roughly half of the money required for planned power projects.

The requirement extends across transport, industry and other infrastructure that supports production.

The African Development Bank estimates Africa’s development financing gap at about $400 billion annually, leaving the continent’s productive investment needs far above the funding currently being mobilised.

PAPSS Is Cutting Dollar Transactions, Not Africa’s Dollar Capital Price

PAPSS entered Central Africa in July when the Bank of Central African States joined, bringing the six CEMAC economies into a system operating across 28 African countries.

More than 190 commercial banks and fintechs and 16 payment switches were participating by then.

Kenya’s Pesalink had joined in February, linking more than 80 banks, fintechs and other financial institutions in the country.

PAPSS allows a sender to pay in one African currency and the recipient to receive another without converting the transaction into dollars first.

The platform says transfers can be completed within 120 seconds, against three to seven business days for conventional cross-border payments on the continent.

Its connection with Pesalink also brought the service into Kenya’s banking and mobile-money infrastructure.

At the end of a settlement cycle, PAPSS calculates what participating central banks owe in their respective currencies and sends the instructions through national real-time gross settlement systems.

Afreximbank receives a separate instruction for the equivalent hard-currency amount and adjusts the settlement accounts held by the central banks.

Use of the yuan has expanded in some transactions between China and African economies.

African financial institutions are participating in China’s Cross-Border Interbank Payment System, while Zambia has accepted the Chinese currency for some mining royalty payments. Kenya has also converted Chinese infrastructure loans into yuan.

BRICS finance ministers and central-bank governors continued discussions in September on greater use of local currencies and connections between national payment systems.

Work involving fast-payment networks and central-bank digital currencies was also under discussion, without a common BRICS settlement system in use.

African governments still issue Eurobonds through international debt markets, where yields are set independently of PAPSS, while credit-rating agencies continue to assess sovereign borrowers separately.

No published evidence from PAPSS or the BRICS payment initiatives has tied the expansion of local-currency settlement to lower African sovereign spreads.

Africa’s Capital Problem Is Moving From Currency to Creditworthiness

Capital mobilised alongside World Bank Group financing in Africa reached $22 billion in the 2026 financial year, up from about $9 billion four years earlier.

The Lobito Atlantic Railway has secured financing for the route running from Angola’s coast toward the copper regions of Zambia and the Democratic Republic of Congo, where mining companies are expanding production and transport capacity is being built around the region’s mineral trade.

The U.S. International Development Finance Corporation announced more than $8 billion of commitments in September across Africa and other markets, with energy, infrastructure and projects connected to strategic resources receiving backing.

The commitments add to financing already moving into assets with commercial revenues from power generation, mineral production and transport.

African governments enter international debt markets on the strength of their public finances rather than the commercial prospects of individual mines, railways or power projects.

Revenue available to the state, external liquidity and the ability to service existing obligations remain part of the assessments behind sovereign ratings and bond prices.

The African Development Bank’s new rating initiative will operate within that market as governments prepare for future credit reviews.

Several African governments face refinancing requirements in 2027, bringing new Eurobond transactions and sovereign rating decisions before international investors.

The spreads attached to those bonds will put a new market price on African sovereign credit as governments return to international capital for their next round of financing.