Strong dollar, heavy debt threaten Africa’s currencies, development spending – Dangote Group

A strong US dollar, elevated global interest rates and heavy external debt are putting pressure on African currencies and limiting governments’ capacity to finance development, even as the continent’s economy remains resilient.

This is according to Dangote Group’s H1 2026 Economic Report.

The report identified tight external financing conditions as a major constraint on Africa’s economic outlook, warning that countries with heavy external debt and significant energy import bills face mounting pressure on their currencies, public finances and household incomes.

According to the report, the combination of a firm dollar, high global interest rates and heavy external debt is creating a difficult financing environment for African economies.

The conditions are particularly challenging for countries that rely on external borrowing and energy imports, as higher financing costs increase debt-servicing pressures while rising import bills weigh on currencies and government budgets.

The report said the outlook assumes that external financing conditions will remain tight for African sovereign borrowers in the second half of the year.

It added that countries importing energy and carrying significant external debt would face compounded vulnerabilities, while economies exporting energy and maintaining credible macroeconomic policies could benefit from improved trade balances and rebuild their financial buffers.

The report said Africa’s economic performance remained resilient in the first half of 2026, although growth patterns varied across regions, with West and East Africa continuing to outperform southern Africa.

Côte d’Ivoire, Kenya and Ghana sustained growth in the mid-to-high single digits, while Egypt consolidated its recovery within the 4% to 5% range. Nigeria’s growth settled at around 4%, while South Africa remained the weakest performer among the continent’s major economies, growing at approximately 2%.

The report attributed South Africa’s slower performance to persistent electricity and logistics bottlenecks, which continue to constrain economic activity.

The report noted that shifts in global commodity prices have widened the economic divide between African countries, depending on whether they export or import energy and other key commodities.

Meanwhile, firmer fertiliser prices were identified as a potential source of additional food inflation across the continent.

Currency movements also reflected differences in economic fundamentals and policy credibility across Africa.

It argued that economies with credible policies and favourable commodity exposure are better positioned to withstand external pressures, while those facing large import bills and heavy external debt remain more vulnerable to currency and fiscal instability.

Despite the financing challenges, the report expects African economic growth to remain resilient in the second half of 2026, led by West and East African economies.

The report also identified the African Continental Free Trade Area (AfCFTA), expanding trade access to China and renewed engagement with Europe as structural opportunities that could support the continent’s longer-term growth.

It said Africa’s economic outlook would depend significantly on what individual countries export and the credibility of their macroeconomic policies.

The report also noted that the Dangote Petroleum Refinery supplied approximately 50 million litres of petrol daily to Nigeria’s domestic market in the first half of 2026, as the facility expanded production and exports to international markets.

According to the report, daily petrol supply reached a record 56 million litres in April, against a planned evacuation of approximately 1.1 million tonnes monthly.

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