Africa’s financial landscape is entering a pivotal phase, with strong banking sector performance, rising sovereign borrowing and diverging policy decisions unfolding against a backdrop of heightened global uncertainty.
Ethiopian banks post record earnings as sector expands
Ethiopia’s banking sector delivered its strongest performance on record in the 12 months to June 2025, with profits hitting an all-time high alongside rapid balance sheet expansion, according to the National Bank of Ethiopia’s latest Financial Stability Report.
Why it matters: Ethiopia’s banking boom underscores the scale of untapped opportunity in its financial system, particularly as the country gradually opens up. However, rising concentration risks could test financial stability if not carefully managed, especially as reforms attract foreign interest.
Africa’s borrowing to hit $155bn as Middle East tensions cloud outlook
African sovereign borrowing is projected to rise to a three-year high of $155 billion in 2026, driven by refinancing needs and fiscal pressures, according to S&P Global. However, escalating tensions in the Middle East risk tightening global financial conditions, potentially raising borrowing costs and limiting market access for frontier economies.
Why it matters: While the reopening of international debt markets signals renewed investor confidence, geopolitical shocks could reverse gains. Higher oil prices and global risk aversion may increase debt servicing costs for already stretched African economies.
Nigeria, Angola to ramp up borrowing ahead of elections
Nigeria and Angola are expected to increase borrowing in 2026 as both countries approach election cycles, a period typically associated with higher public spending, S&P Global said. The two oil-producing economies are likely to face rising fiscal pressures as governments boost spending ahead of polls scheduled for 2027.
Why it matters: Pre-election borrowing could widen fiscal deficits and increase debt vulnerabilities, particularly if oil price gains are volatile. It also raises concerns about fiscal discipline and long-term debt sustainability in two of Africa’s largest economies.
Ghana cuts rates to four-year low as peers pause
Ghana’s central bank has continued its easing cycle, cutting its benchmark interest rate by 150 basis points to 14 percent, the lowest level since October 2021, even as other African central banks adopt a wait-and-see approach. The move marks Africa’s biggest gold producer’s fifth consecutive rate cut, reflecting easing inflation and improving domestic conditions, although policymakers remain cautious about external risks linked to the Middle East crisis.
Why it matters: Ghana’s policy divergence highlights shifting dynamics across African economies. While some countries are moving to support growth, global uncertainty and oil price shocks could limit the pace of further easing across the continent.
South Africa inflation eases, but rate cuts remain unlikely
South Africa’s inflation slowed to 3.0 percent in February, its lowest level in eight months, reinforcing a trend of easing price pressures. However, the South African Reserve Bank is expected to hold interest rates steady next week, as rising oil prices linked to Middle East tensions could push inflation higher in the coming months.
Why it matters: Despite improving inflation, policymakers are prioritising stability over stimulus. South Africa’s cautious stance reflects broader concerns that global shocks could derail the continent’s disinflation trend.
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