When a country borrows on the financial markets, the crucial question is not simply how much it wants to raise, but at what price investors are willing to lend. In this respect, African countries often start with a disadvantage. To finance the same type of infrastructure—building a road, strengthening an electricity grid, or modernizing a port—they generally have to pay significantly higher interest rates than developed economies. This gap represents billions of dollars in additional financial burdens each year and constitutes one of the most significant challenges to development financing on the continent.

The comparison is striking. At the beginning of 2025, Germany was borrowing for ten years at a rate close to 2.5%, while several African states had to offer yields exceeding 8%, 10%, or sometimes even more to access international markets. Yet, an investor buying a German bond or an African bond is not necessarily financing fundamentally different projects. What changes is the perception of risk.

This perception is based primarily on a country's presumed ability to generate sustainable public revenue. Large, developed economies generally have deep financial markets, long-established tax administrations, strong economic diversification, and near-constant access to international investors. Creditors therefore consider a default to be extremely unlikely, even when the debt level is high.

Japan is a good example of this logic. Its public debt exceeds 250% of GDP according to the IMF, a level far higher than that observed in almost all African economies. Yet, Tokyo continues to borrow at relatively low rates because investors place significant confidence in the strength of its institutions, the depth of its financial market, and its refinancing capacity.

Conversely, several African economies remain more vulnerable to external shocks. A drop in oil prices, a fall in commodity prices, a major weather event, or a political crisis can quickly affect government revenues and macroeconomic stability. Investors factor this vulnerability into their calculations, which inevitably results in higher interest rates.

Debt restructurings in recent years have also reinforced this caution. Zambia defaulted on its external debt in 2020. Ghana initiated a major restructuring starting in 2022. Ethiopia also requested a debt restructuring. Even when a country is not experiencing any particular difficulties, investors take these precedents into account when assessing the risk associated with emerging or African markets.

Credit ratings play a crucial role here. Specialized agencies like Moody's, S&P Global Ratings, and Fitch regularly assess the creditworthiness of countries. A downgrade can lead to an almost immediate increase in the returns demanded by investors. Conversely, an improved risk perception can reduce the cost of financing. However, several African officials contest some of the methods used by these agencies, arguing that they sometimes penalize the continent more than economic fundamentals would justify.

The African Development Bank has dedicated several studies to this issue. In a report published in 2024, the institution estimated that some African countries were bearing an excessive risk premium, which artificially increased their access to international capital. According to its calculations, this overestimation of risk represents several billion dollars in additional costs each year for the economies concerned.

But the cost of debt doesn't depend solely on the interest rate. The duration of the loans, which specialists call the maturity, is another essential element, often less visible in the public debate. Two countries can borrow at the same rate but present very different risk profiles depending on the length of time they have access to the funds.

Large developed economies generally benefit from access to very long-term financing. France has already issued fifty-year bonds. Austria placed a one-hundred-year sovereign bond in 2017. The United States regularly finances a portion of its debt with twenty- or thirty-year maturities. This capacity offers a form of financial comfort, since it limits the frequency with which governments must return to the markets to refinance their borrowing.

The situation is very different in much of the emerging world and Africa. Even though maturities have gradually lengthened in recent years, states often continue to borrow over shorter periods. In the WAEMU region, issuances frequently have terms of a few months, one year, three years, five years, or seven years. Longer maturities exist, but they are less frequent and generally involve smaller volumes.

This difference has very real consequences. A country that borrows for thirty years locks in its financing conditions for three decades. A country that borrows for three or five years will have to return to investors much more quickly to refinance its debt. And no one can guarantee that market conditions will be as favorable at the time of refinancing.

This is precisely what investors call refinancing risk. The closer the maturities, the more a country depends on continued market confidence. A sudden rise in global interest rates, a rating downgrade, or a financial crisis can then rapidly increase the cost of debt renewal.

Senegal offers an interesting example of this trend. For several years, the authorities have been seeking to diversify financing profiles and develop the regional capital market in order to reduce dependence on external foreign currency financing. According to data from UMOA-Titres, the outstanding amount of government securities in circulation within the Union exceeded 20 trillion CFA francs in 2025, compared to less than 5 trillion a decade earlier. This growth reflects the increasing strength of a regional market capable of mobilizing a growing share of available savings.

On April 30, 2026, the Senegalese Treasury raised 26.06 billion CFA francs on the regional market. The operation achieved an oversubscription rate of 115.2%, indicating that investor demand exceeded the target amount. However, average yields were 7.29% for short-term bills and 8.05% for three-year bonds, illustrating the still relatively high cost of financing compared to standards observed in major advanced economies.

The international monetary environment also contributes to this gap. When central banks in major economies raise their policy rates, as was the case after 2022, investors can obtain more attractive returns on assets considered very safe. African states must then offer additional returns to continue attracting international capital.

This situation has direct repercussions on public finances. According to the IMF, several sub-Saharan African countries are now devoting an increasing share of their tax revenue to debt servicing. In some cases, interest payments to creditors absorb a proportion comparable to, or even greater than, the budgets allocated to certain social sectors. The higher the cost of financing, the smaller the available funds become for investing in infrastructure, education, health, or the energy transition.

The issue therefore goes far beyond the question of debt alone. For African economies, it also involves developing deeper financial markets, broadening the base of local investors, improving the quality of sovereign credit ratings, and progressively extending financing maturities. A country does not simply strengthen its financial sustainability by borrowing less; it can also strengthen it by borrowing better, on better terms, and over timeframes more aligned with the actual pace of economic development.