Business · Economy · 5 hrs ago
African firms face borrowing costs 1.8 percentage points higher
African companies pay more to borrow through corporate bonds than companies in high-income countries, according to an International Finance Corporation study.
It found that from 2015 to 2024, the median real bond yield was 2.8% in African countries, compared with 1% in high-income countries.
The study examined more than 330,000 bonds from over 50,000 firms worldwide across three decades.
Borrowing costs also vary widely across African countries, reflecting differences in local financial and fiscal conditions.
The findings matter because high financing costs can make long-term funding less affordable for businesses.
The IFC says pension reforms, more open capital markets and stronger corporate governance could help reduce the gap.
African firms face median real corporate borrowing costs 1.8 percentage points higher than firms in high-income economies, according to an International Finance Corporation analysis.
Between 2015 and 2024, median real corporate bond yields were 2.8% in African countries and 1% in high-income countries.
The analysis covered more than 330,000 bonds issued by over 50,000 firms across 30 years.
Borrowing costs varied among the selected African markets, ranging from 2.1% in Egypt to 4.9% in Nigeria.
The IFC said fiscal conditions, global financial shocks, local investor markets, regulation and company characteristics affect borrowing costs.
- Who
- African businesses and firms in high-income economies.
- What
- African firms face median real borrowing costs 1.8 percentage points higher, according to an IFC analysis.
- When
- The bond yield comparison covers 2015 to 2024. The analysis spans 30 years.
- Where
- African corporate bond markets, compared with those in high-income economies.
- Why
- Borrowing costs are influenced by fiscal conditions, global financial shocks, local investor markets, regulatory frameworks and company characteristics.
This story does not have two clearly opposing sides.
Median real corporate bond yields were 2.8% in African countries and 1% in high-income countries.
TechCabal published its report on the IFC analysis.
- Borrowing-cost gap
- 180 basis points, or 1.8 percentage points
- African median yield
- 2.8% between 2015 and 2024
- High-income median yield
- 1% between 2015 and 2024
- Analysis sample
- More than 330,000 bonds from over 50,000 firms
- Selected market yields
- Nigeria 4.9%; Morocco 3.9%; South Africa 4.7%; Egypt 2.1%