Why African Countries Pay More to Borrow—and the Push for Fairer Credit

African governments say many countries on the continent pay unusually high interest rates to borrow, even when their repayment records do not appear to justify the extra cost. At events in London, Nigeria’s Finance Minister Taiwo Oyedele and Ghana’s President John Mahama called for a closer look at how global markets assess African risk. They argue that broad perceptions of “Africa risk” can raise borrowing costs across countries with very different economies and debt histories. The added expense can leave governments with less money for infrastructure, education, health care and climate adaptation. Mahama has also cited estimates of large annual outflows from Africa through illicit financial flows, debt servicing and risk premiums. African leaders are pushing for change. The African Union launched the Africa Credit Rating Agency in Mauritius to offer alternative assessments, though the agency will need to establish its credibility and independence. Proposed reforms include evaluating countries individually, giving repayment histories more weight and making rating methods more transparent. The article also acknowledges that governance, data quality and institutional weaknesses can increase perceived risk. Its central question is whether African countries are being assessed fairly—and whether better data, stronger institutions and more competition among rating agencies can reduce borrowing costs.

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