Strong dollar, heavy debt threaten Africa’s currencies, development spending – Dangote Group

A strong US dollar, elevated global interest rates and heavy external debt are putting pressure on African currencies and limiting governments’ capacity to finance development, even as the continent’s economy remains resilient.

This is according to Dangote Group’s H1 2026 Economic Report.

The report identified tight external financing conditions as a major constraint on Africa’s economic outlook, warning that countries with heavy external debt and significant energy import bills face mounting pressure on their currencies, public finances and household incomes.

Strong dollar and high interest rates deepen financing pressures

According to the report, the combination of a firm dollar, high global interest rates and heavy external debt is creating a difficult financing environment for African economies.

The conditions are particularly challenging for countries that rely on external borrowing and energy imports, as higher financing costs increase debt-servicing pressures while rising import bills weigh on currencies and government budgets.

• “The structural constraint is the combination of a firm dollar, high global rates and heavy external debt, which strains currencies and crowds out development spending,” the report stated.

The report said the outlook assumes that external financing conditions will remain tight for African sovereign borrowers in the second half of the year.

It added that countries importing energy and carrying significant external debt would face compounded vulnerabilities, while economies exporting energy and maintaining credible macroeconomic policies could benefit from improved trade balances and rebuild their financial buffers.

Africa’s economy remains resilient

The report said Africa’s economic performance remained resilient in the first half of 2026, although growth patterns varied across regions, with West and East Africa continuing to outperform southern Africa.

Côte d’Ivoire, Kenya and Ghana sustained growth in the mid-to-high single digits, while Egypt consolidated its recovery within the 4% to 5% range. Nigeria’s growth settled at around 4%, while South Africa remained the weakest performer among the continent’s major economies, growing at approximately 2%.

The report attributed South Africa’s slower performance to persistent electricity and logistics bottlenecks, which continue to constrain economic activity.

Commodity prices widen economic differences across Africa

The report noted that shifts in global commodity prices have widened the economic divide between African countries, depending on whether they export or import energy and other key commodities.

• Oil and gas exporters have benefited from higher energy prices through increased export receipts and government revenue. However, energy-importing countries have faced higher fuel and fertiliser costs, contributing to inflation and reducing household purchasing power.
• The report also highlighted the importance of cocoa and gold to West African economies.
• Cocoa prices reversed sharply from their earlier surge, creating potential pressure on the fiscal and export earnings of Côte d’Ivoire and Ghana. Gold prices, although lower than their January record, remained historically elevated, supporting producers such as Ghana and providing a reserve asset for central banks managing currency pressures.

Meanwhile, firmer fertiliser prices were identified as a potential source of additional food inflation across the continent.

Naira gains as currency performance diverges

Currency movements also reflected differences in economic fundamentals and policy credibility across Africa.

• The report said the naira appreciated by around 4% against the US dollar year to date, supported by reserve accumulation and positive real interest rates.
• In contrast, Ghana’s cedi depreciated by approximately 11%, while South Africa’s rand remained broadly flat over the same period.
• The report linked the differences in currency performance to the varying strength of countries’ external positions and macroeconomic frameworks.

It argued that economies with credible policies and favourable commodity exposure are better positioned to withstand external pressures, while those facing large import bills and heavy external debt remain more vulnerable to currency and fiscal instability.

Africa’s growth outlook remains resilient

Despite the financing challenges, the report expects African economic growth to remain resilient in the second half of 2026, led by West and East African economies.

• South Africa is expected to remain the laggard among the continent’s major economies, while energy exporters are projected to continue benefiting from favourable terms of trade.
• Energy importers, however, are expected to contend with persistent inflationary pressures and more expensive external financing.

The report also identified the African Continental Free Trade Area (AfCFTA), expanding trade access to China and renewed engagement with Europe as structural opportunities that could support the continent’s longer-term growth.

It said Africa’s economic outlook would depend significantly on what individual countries export and the credibility of their macroeconomic policies.

• “Where an economy exports energy and runs a credible framework, the current environment is favourable and buffers can be rebuilt,” the report stated.
• “Where it imports energy and carries heavy external debt, the environment compounds existing vulnerabilities in the currency and the budget.”

Petrol supply

The report also noted that the Dangote Petroleum Refinery supplied approximately 50 million litres of petrol daily to Nigeria’s domestic market in the first half of 2026, as the facility expanded production and exports to international markets.

According to the report, daily petrol supply reached a record 56 million litres in April, against a planned evacuation of approximately 1.1 million tonnes monthly.