African Borrowing Costs Surge 91% Since 2020, Squeezing 'Middle' Nations
Event summary
- African borrowing costs rose 91% from 2020 to 2024, with World Bank IBRD rates spiking 270% and China's lending rates up 125%.
- Countries in the 'squeezed middle' (e.g., Kenya, Ghana) face the harshest impact, lacking access to both concessional and market-rate financing.
- Multilateral lending remains critical but scarce, with World Bank IBRD loans saving countries $22–$48 per $100 compared to market rates.
- The Development Finance Observatory, launching later in 2026, aims to provide a coherent picture of global development finance flows.
The big picture
The sharp rise in borrowing costs for African nations reflects a broader reversal of the low-interest-rate environment of the 2010s, exacerbated by global crises like COVID-19 and the Ukraine war. The 'squeezed middle' countries, caught between concessional and market-rate financing, face existential threats to their economic stability. Multilateral lenders like the World Bank remain vital but are constrained by limited resources, highlighting the urgent need for systemic reforms in global development finance.
What we're watching
- Geopolitical Risk
- How the Iran crisis and other global shocks will further strain African economies and borrowing costs.
- Debt Restructuring
- Whether multilateral lenders can accelerate debt restructuring to ease the burden on highly indebted nations.
- Financing Access
- The pace at which the Development Finance Observatory can influence policy and improve access to affordable capital.
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