- OECD Warns Shallow Debt Markets Leave African Firms Vulnerable to Credit Shocks
Africa’s corporate debt markets remain too small, concentrated and foreign-currency dependent to meet the continent’s investment needs, leaving many firms with limited options when bank lending tightens or international investors retreat.
Outstanding corporate debt across bonds, syndicated loans and private credit totalled US$211 billion at the end of 2025, according to the OECD’s Africa Capital Markets Report 2026.
That represented just 0.3% of global corporate debt, despite Africa accounting for 2.7% of global GDP. The disparity captures the central problem: the continent’s firms have limited access to market-based financing relative to the scale of the economies in which they operate.
The weakness is not simply a matter of a small bond market. The composition of corporate borrowing is also narrow. Syndicated loans accounted for 81% of outstanding corporate debt in 2025, while corporate bonds totalled US$35 billion.
That bond market was 44% smaller in real terms than at its 2015 peak. Only 20 corporate bonds were issued across Africa last year, and 17 came from financial firms.
This leaves companies heavily reliant on banks and other lenders, with relatively little capacity to substitute into bonds when credit conditions change. Bank lending remains essential, but a system dependent on one dominant source can become fragile.
During periods of stress, banks may restrict lending to protect their balance sheets, while foreign creditors can withdraw from markets they regard as risky. A deeper bond market could give eligible companies another route to raise long-term funds.
The OECD describes capital markets as underused sources of long-term financing that could strengthen growth and resilience. The issue is whether the markets are deep and accessible enough to serve that function.
At present, they are concentrated in a few countries and largely used by larger firms. Six economies Egypt, Mauritius, Morocco, Mozambique, Nigeria and South Africa accounted for 80% of outstanding corporate debt at the end of 2025. South Africa alone represented 30%.
That concentration means the headline total can overstate how much financing is realistically available to companies across the continent. A firm’s ability to issue a bond depends on whether it operates in a functioning market, can meet disclosure and credit requirements, and can attract investors at an affordable rate. Smaller and mid-sized firms, which often have fewer financing options, remain primarily dependent on bank lending.
The currency in which debt is issued creates another vulnerability. Only 17% of corporate debt issued in 2025 was denominated in local currencies. When a company earns revenue in local currency but owes dollars or euros, a depreciation can raise the domestic-currency cost of repayments, even if the amount owed in foreign currency has not changed. T
hat risk can deter borrowing, squeeze cash flow and make long-term projects more difficult to finance.
Developing local-currency markets is therefore not only about increasing the number of bonds. It is about giving companies a way to match their financing currency with their income.
That requires investors willing to hold long-term local-currency securities, reliable pricing benchmarks, predictable rules and confidence that contracts will be enforced.
The report points to macroeconomic and institutional conditions as key factors associated with deeper bond markets. Regulatory quality, the rule of law, exchange-rate stability and the development of pension funds are among the strongest correlates.
Its policy recommendations begin with credibility and stability, followed by a credible sovereign yield curve and stronger domestic institutional investor bases.
This sequence matters. Trading platforms and settlement systems can improve the mechanics of a market, but they cannot by themselves persuade investors to commit money for years. Investors also assess whether inflation and exchange rates are predictable, whether regulations are consistently applied and whether company disclosures can be trusted.
Market infrastructure is necessary; it is not a substitute for confidence in the wider economic and legal environment.
Pension funds and insurers could help create a domestic investor base for longer-term corporate securities. The OECD notes that domestic insurance companies accounted for 19% of corporate bonds in 2025.
But institutional savings can only support business investment if investment rules, governance standards and risk management allow funds to assess and hold suitable corporate assets. Stronger markets require a dependable flow of issuers as well as investors willing to finance them.
There are signs of potential demand, but it has not yet translated fully into financing. Private credit assets under management rose from US$2.2 billion in 2020 to US$5.5 billion in 2025. Much of that capital, however, remained undeployed.
The gap between available funds and completed investments suggests that investor appetite alone is insufficient: suitable projects, credible borrowers and workable market conditions are also needed.
The financing challenge is becoming more pressing as external support changes. OECD donor aid to sub-Saharan Africa fell by more than 25% in 2025, increasing the importance of mobilising domestic resources. But private capital markets cannot replace development assistance in every area.
They can help finance creditworthy companies and projects capable of generating returns; public services and investments with limited commercial returns may still require public or concessional financing.
Equity markets offer another channel, though they too remain concentrated. African market capitalisation rose by 49% in 2025, but four countries South Africa, Egypt, Nigeria and Morocco accounted for 88% of the total.
The report points to new listings beyond traditional centres, including Ethio Telecom and Kenya Pipeline Company. It also estimates that three-quarters of large non-financial state-owned enterprises remain unlisted, potentially offering a wider pool of investable assets.
Listings, however, should not be treated as an end in themselves. They can broaden investment opportunities and improve scrutiny of companies, but only if valuations are credible, governance is sound and investors receive reliable information.
Privatisation or public listings without these safeguards risk transferring assets without building trust or productive capacity.
For Ghana and other African economies, the report’s argument is that deeper corporate financing requires more than new products. It requires credible economic management, stronger institutions, transparent companies and domestic investors able to take a long-term view.
The OECD calls for a “broad, whole-of-government approach” because no single regulator or exchange can create those conditions alone.
The US$211 billion market is not evidence that African companies borrow little because they lack investment needs. It is evidence that the systems for converting savings into long-term business financing remain limited.
Until local-currency debt markets become deeper and more accessible, companies will remain exposed to shifts in bank lending, foreign-exchange movements and global risk appetite.
The test for policymakers is whether they can turn domestic savings and investor interest into financing that reaches productive firms across more countries and at a wider range of sizes.
