Sub-Saharan Africa’s shift to market financing

As African sovereigns move up income groups, concessional funding declines, prompting a shift towards diversified, market-based financing strategies.

3 November 2026

2 mins

Corporate & investment bankingCapital structure and rating advisoryPublic sector & development organisations

Elevated debt levels and declining development assistance are putting pressure on sovereign funding strategies across Sub-Saharan Africa. Against this backdrop, it is increasingly important to anticipate how financing needs and sources evolve as income levels grow.

Our analysis of 48 sovereigns in the continent shows a clear shift in funding mix as countries move up the income ladder. Reliance on multilateral financing declines, while domestic markets become increasingly important.

This can create a financing gap where concessional funding recedes before domestic markets are sufficiently developed, increasing the need for alternative sources of financing.

Creditor composition (per cent Total debt, average per income group, 2025)

Managing the transition requires careful sequencing

Funding diversification should happen progressively, with priorities evolving alongside income levels, institutional capacity and market access. For low-income countries, preserving concessional access remains critical while planning and selectively developing access to market-based financing.

For lower-middle-income countries, the focus shifts towards broadening funding instruments, deepening domestic markets and expanding access to external financing.

At higher income levels, improving financing terms and broadening the investor base become increasingly important to portfolio resilience.

The key question for sovereigns is therefore: how should today’s funding strategy evolve to support the next stage of development?

Answering it requires governments to look ahead:

• assessing debt sustainability and refinancing pressures,
• identifying an appropriate debt mix, and
• broadening funding capacity before constraints become acute.

Consistent execution can then help optimise portfolio composition and strengthen resilience over time.

Navigating the next stage of sovereign financing

Our Capital Structure & Ratings Advisory team supports sovereigns in navigating evolving financing needs, from debt sustainability analysis, capital structure considerations and Medium-Term Debt Strategy development to funding diversification, ratings strategy and investor engagement.

If you are reviewing how your debt and funding strategy should evolve as financing conditions change, speak to our team to explore the options available.