Fitch warned that rising debt levels and global interest rates could lead to downgrades in as many as 10 African countries, with Kenya, Ghana, Lesotho, Namibia, Rwanda and Uganda the most vulnerable.
In the new report released on Thursday, Fitch predicted that debt-to-GDP ratios would increase both this year and next in more than half of the 19 Sub-Saharan African countries it rates.
In addition to lacklustre growth, socio-political instability, and lack of public investment, this year will also see a wave of interest rate hikes in major economies like the United States.
“A rise in government debt/GDP would be a potential negative rating action trigger for most SSA sovereigns, particularly those whose ratings are on negative outlook,” Fitch’s report said.
The rating agencies have already issued downgrade warnings for Kenya (B+/Negative), Lesotho (B/Negative), Namibia (BB/Negative), Rwanda and Uganda (B+/Negative).
Fitch also rates Ghana’s credit rating at ‘B-‘ with a negative outlook. There are growing concerns about a possible default there, so Fitch said further downgrades would likely be prompted by its inability to borrow on international capital markets.
However, the report was not all doom and gloom. Angola and Gabon have both had their ratings upgraded in recent months, helped by the rise of oil prices, which have boosted their finances; Congo has also seen its rating raised.
A rapid economic recovery in Benin is predicted this year, while Seychelles and Cabo Verde are expected to see visitor numbers rebound this year as Coronavirus travel restrictions ease.
“Our forecasts for Sub-Saharan Africa general government debt trajectories diverge more widely over 2022-2023, as pandemic-related pressures recede and economic recoveries gather momentum,” Fitch said.