Markets & Policy/Force / 08
The numbers improved.
The terms did not.
Growth is up and inflation is down, while the cost of borrowing stays priced for a worse story.
The state of it/01
A better year,
on the numbers.
Sub-Saharan Africa grew 4.1 percent in 2025, up from 3.6 percent the year before. Inflation eased to 3.4 percent, down from 4.3 percent.
That is a genuine improvement on both of the measures that policymakers are usually judged by. It has not translated into cheaper money.
Part of the reason is domestic. Banks are lending to governments rather than firms, and private credit has fallen to 29.4 percent of GDP from 39.8 percent in 2018. The state is crowding out the borrower who would build something.
Part of it is external. A region is priced as a block by investors who rarely distinguish between the countries inside it, so a good year in one place is discounted by a bad headline in another.
What decides it/02
What decides
whether policy is believed.
A single reform announcement moves nothing. What moves pricing is a rule that survives an election, a currency shock and a change of minister.
This is why markets discount new policy heavily and reward boring continuity. The discount is not unfairness. It is memory.
Before returns, an investor asks whether money can leave. Where repatriation is slow or rationed, the required return rises to cover the wait, and marginal projects stop clearing.
A restriction imposed for one quarter can raise the cost of capital for years, because everyone now knows it is available.
Continental trade rules lower tariffs. Most of the actual cost of moving goods within Africa is not tariff. It is border dwell time, documentation, road blocks and the cost of financing inventory that sits still.
Progress shows up in days at the border, not in the text of the agreement.
The problem for most African sovereigns is not the size of the stock. It is the maturity wall: too much falling due in too few years, in a currency they do not print.
Restructurings that reprofile maturities solve more than restructurings that argue about haircuts.
What it means/03
Repetition is what
repricing rewards.
Terms follow a track record, not a good year. Several African markets are now several years into being dull in exactly the right way. That is when the cost of capital starts to move.
The Brief/
The NextStep Africa
Brief.
What the engine turns up, every fortnight. From Lagos.
- What moved
- The change that mattered, and the number under it.
- How it connects
- The systems involved, and what one does to another.
- What it turns on
- What has to go right, and who is already building it.
- What to watch
- One indicator, and when it resolves.
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NextStep Africa / Lagos