African governments can barely catch a break.
Just as regional finance ministers were beginning to get over what the International Monetary Fund dubbed “the great funding squeeze” in the aftermath of the Covid-19 pandemic, they’re facing another surge in borrowing costs that’s locked many out of credit markets once again.
Trump’s tariff chaos has had an amplified impact on African sovereign bonds, which suffered as oil and other commodity prices plunged on fears that the trade war would cause a global economic slowdown.
With the continent now facing a double whammy from US tariffs and lower earnings from commodity exports, many governments will have to return for help to the IMF, which is hosting its Spring meetings next week in Washington.
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“Given how tight financing conditions are,” said David Omojomolo, Africa economist at Capital Economics Ltd., “it seems inevitable.”
With the world’s finance ministers and central bankers heading to Washington for the meetings, those from the least-developed continent in particular will likely be having serious talks about accessing more funding to cover shortfalls.
Countries already in talks with the IMF for fresh financing, including Kenya and Senegal, may face new urgency to finalize deals, said Aurelie Martin, economist and investment analyst at Ninety One in London.
“Global shocks and huge funding squeezes have put all manner of pressures on our countries,” IMF Africa Director Abebe Selassie told reporters in Dakar on April 8. “I wouldn’t rule out more countries coming.”
The pandemic wiped out growth and revenues, then Russia’s invasion of Ukraine sent inflation soaring. Interest rates rocketed as a result, shutting African nations out of debt markets from 2020. Now, the trade-war fallout presents another shock.
Even before the tariff tumult, Africa’s debt costs had surged as governments increasingly turned to commercial borrowing. Average interest payments in 2024 rose to 27% of government revenue from 19% five years earlier, the United Nations Economic Commission for Africa said in a report last month.
In some economies — including Nigeria, Angola, Egypt, Ghana, and Uganda — governments spend more on debt servicing than on education and health, according to the report. And these pressures will grow as European donors including the UK cut aid budgets to boost defense spending in response to pressure from the Trump administration, which itself already cut aid drastically.
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To be sure, the direct tariff impacts would be relatively small for most African countries, where trade with China is more than three times the value with the US.
According to Yvonne Mhango, Africa economist, “Dollar liquidity of African countries is at risk of deteriorating following decisions by the US to cut aid and impose tariffs. This will compel vulnerable countries to seek IMF funding.”
