Annual Meetings

Over the past two decades, the way Sub-Saharan African (SSA) countries borrow from external sources has changed significantly. This presentation looks at newer, non-traditional ways these countries are getting funding from non-official sources, emphasizing the pros and cons of borrowing in foreign versus local currencies.

We find that global financing conditions—like shifts in U.S. interest rates or economic uncertainty—have a big impact on SSA’s ability to borrow. But countries in the region can still make strong progress by improving governance and reducing risks in their economies and political environment.

We also explore what affects a country’s chances of successfully issuing bonds or borrowing in the international syndicated loan market. Countries with stronger local conditions are more likely to weather global financial volatility.

The presentation also looks at what drives borrowing costs and whether credit rating agencies treat SSA countries fairly. Once we account for economic fundamentals, there’s little evidence of bias, and any extra risk premium seems modest in normal times, yet it becomes more significant during periods of turmoil.

Finally, we highlight an emerging trend: SSA countries are borrowing more in their own currencies. This helps reduce risks from exchange rate swings and can lower borrowing costs—but it also brings new challenges, like market volatility