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A strong US dollar, elevated global interest rates and mounting external debt are increasing pressure on African currencies and government finances.
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Nigeria’s naira appreciated by about four per cent against the dollar in the first half of 2026, while Ghana’s cedi depreciated by approximately 11 per cent, according to the report.
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Higher energy and fertiliser prices, alongside changing cocoa and gold prices, are widening economic differences across the continent.
October 12, (THEWILL) – The Dangote Group has warned that a strong US dollar, high global interest rates and rising external debt are threatening development spending across Africa, as governments face increasing pressure to service foreign obligations while financing infrastructure and essential public services.
The warning was contained in the group’s first-half 2026 Economic Report, which identified tight external financing conditions as a major risk to the continent’s economic outlook despite continued resilience in economic activity.
According to the report, countries with substantial external debt and large energy import bills are particularly exposed to currency instability, rising borrowing costs and higher import expenses.
The combination could force governments to allocate more resources to debt servicing, leaving less funding available for infrastructure, social services and other development priorities.
“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.
It expects external financing conditions to remain tight in the second half of 2026, increasing the vulnerability of countries with weaker external positions.
Uneven Growth Across African Economies
Despite these pressures, the report described Africa’s economic performance in the first half of 2026 as resilient, although growth varied significantly across countries and regions.
West and East Africa continued to outperform southern Africa, with Côte d’Ivoire, Kenya and Ghana recording growth in the mid-to-high single digits.
Egypt consolidated its recovery, with growth estimated at between four and five per cent, while Nigeria’s economic growth stood at around four per cent.
South Africa remained one of the weaker performers among the continent’s major economies, with growth of approximately two per cent.
The report attributed South Africa’s subdued performance partly to persistent electricity shortages and logistics bottlenecks, which continue to constrain production and economic activity.
The differences in performance underscore how domestic infrastructure, policy choices and exposure to external shocks influence countries’ capacity to sustain growth.
Commodity Prices Widen Economic Differences
Changes in global commodity prices have further divided African economies according to their exposure to energy and other major exports.
Oil and gas exporters have benefited from higher energy prices through increased export earnings and government revenue.
However, energy-importing countries have faced higher fuel and fertiliser costs, adding to inflation and putting pressure on household purchasing power.
The report also highlighted developments in cocoa and gold markets as important factors shaping West Africa’s economic outlook.
Cocoa prices retreated sharply from their earlier surge, potentially weakening export earnings and government revenue in Côte d’Ivoire and Ghana, two of the world’s major cocoa producers.
Gold prices, although below their January record, remained historically elevated.
This has supported producers such as Ghana while strengthening gold’s importance as a reserve asset for central banks seeking to manage external pressures.
Meanwhile, higher fertiliser prices threaten to increase agricultural production costs, with potential consequences for food prices and inflation across the continent.
These developments mean that the same global market movement can produce sharply different outcomes for African economies, depending on their trade structures and dependence on imported commodities.
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Diverging Currency Performance
Currency movements during the first half of 2026 reflected differences in external balances, commodity exposure and the credibility of national economic policies.
The report said the naira appreciated by approximately four per cent against the US dollar year to date, supported by reserve accumulation and positive real interest rates.
Ghana’s cedi, by contrast, depreciated by around 11 per cent, while South Africa’s rand remained broadly flat over the same period.
The contrasting performances illustrate the importance of external reserves, interest-rate conditions and economic policy in determining how currencies respond to global financial pressures.
Countries with stronger external positions and credible macroeconomic frameworks may be better equipped to withstand a firm dollar and expensive international credit.
Those with large import bills and substantial external debt face greater risks of depreciation, imported inflation, and rising debt-servicing costs.
For governments, currency weakness can also increase the domestic-currency cost of servicing foreign-currency debt, further tightening already constrained budgets.
Tight Financing Conditions Pose Second-Half Risk
Looking ahead, the Dangote Group expects Africa’s economic growth to remain resilient in the second half of 2026, led by West and East African economies.
However, the outlook remains vulnerable to persistent external financing pressures, commodity-price volatility, and differences in countries’ economic fundamentals.
The report’s central concern is that continued growth may not translate into stronger development outcomes if governments are forced to devote increasing amounts of revenue to debt obligations.
For African economies, the challenge will be to preserve macroeconomic stability, strengthen external buffers and manage borrowing costs while protecting investment in infrastructure and productive sectors.
The report’s assessment suggests that resilience alone will not be enough.
Countries’ ability to sustain development will also depend on how effectively they manage external debt, respond to commodity shocks and preserve the fiscal resources needed to support long-term economic growth.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
