A new Moody’s report reveals that South Africa, Nigeria, and Kenya are grappling with persistently high borrowing costs, stifling growth and development across sub-Saharan Africa. According to the report, governments and businesses across the region have faced steep interest rates over the past five years, driven by policy weaknesses, inflation, and unfavorable market conditions. While development partners offer some relief with lower-rate loans, these have failed to fully offset expensive capital market rates, both local and foreign. In Kenya, heavy government borrowing has squeezed businesses, while in Nigeria, inflation and low savings have done the same. While South Africa’s deeper domestic capital markets offer some relief, fiscal concerns still keep its costs high relative to other emerging market economies. Moody’s warns that without structural reforms, persistently high borrowing costs could choke investment, worsen growth prospects, and trap these economies in a cycle of financial strain.
CNBC Africa
