Africa pays high price for misjudged risk — $75bn lost annually

Misjudged risk assessments and persistent financial bias are costing African countries a staggering $75 billion annually in inflated borrowing costs and lost revenues,according to the Africa Finance Corporation (AFC).

AFC President Samaila Zubairu described the misperception as a “prejudice premium,” arguing that Africa’s default rates are “really,really exaggerated.” Research by Moody’s Ratings supports his claim,showing that African sovereign default rates are in line with similarly-rated regions — yet the continent’s debt consistently trades at higher spreads. Data from the World Bank between 2010 and 2020 reinforces this,revealing that Africa had the second-lowest infrastructure loan default rate globally. Still,investors demand an average 9.8% yield on African bonds,far above Latin America’s 6.5%.

“Yes,there is risk but there is return,” said Ndidi Okonkwo,president of the One Campaign,adding that “for the last three decades,return on infrastructure investments in Africa was six times that of the S&P 500.” Both Zubairu and Okonkwo urged greater transparency. Calls are growing for African nations to publish more consistent economic data and formalize the vast informal sector to correct skewed investor perceptions. In response,the African Union plans to launch its own credit ratings agency,with the first sovereign rating expected by late 2025 or early 2026.