S&P Global Ratings expert insights on African economies

African economies are facing challenges stemming from heavy debt servicing costs and poor growth, which may impact credit ratings for several sub-Saharan countries in the coming years. Ravi Bhatia, Director and Lead Analyst at S&P Global Ratings, recently discussed the ratings landscape in Africa in an interview with CNBC Africa. The conversation highlighted key issues such as high debt-to-GDP ratios, slow economic growth, and the implications for credit ratings. Bhatia noted that despite the challenges, there have been positive developments in many African countries. He mentioned that S&P Global Ratings had taken several upward rating actions in 25 African countries since the start of the year. Countries like Benin, Cape Verde, Cameroon, Cote d'Ivoire, Egypt, and Morocco either received upgrades or positive outlooks. However, Kenya experienced a downgrade due to fiscal pressures. The positive trend in ratings is attributed to belt tightening, fiscal control, decreasing inflation, and external support from institutions like the International Monetary Fund (IMF). Bhatia also mentioned the potential for lower interest rates, which could further reduce debt servicing costs for African economies. While the outlook is generally positive, Bhatia highlighted potential risks that could derail the progress. Factors such as a spike in oil prices, inflationary pressures, and changes in the Federal Reserve's interest rates could impact borrowing costs and economic stability in Africa. The discussion also touched on the implications of the U.S. presidential election on African economies. Bhatia emphasized that Africa can work with both sides and that the focus should remain on broader policy matters rather than individual personalities. He stressed the importance of monitoring interest rates and inflation trends for their impact on African economies. Specifically, the conversation delved into the situations in Kenya and Mozambique. In Kenya, recent protests against the finance bill and ongoing fiscal pressures led to a rating downgrade by S&P Global Ratings. Despite external financing support and easing inflation, Kenya faces challenges in managing fiscal deficits. On the other hand, Mozambique is poised to become a major liquefied natural gas (LNG) exporter in the future. However, fiscal pressures, limited revenues, and liquidity issues present challenges for the country. The ongoing insurgency in the north adds to the complexity, impacting major projects in the region. Overall, while African economies are navigating through a period of economic challenges, there are also signs of improvement and resilience. The efforts towards fiscal consolidation, external support, and potential growth opportunities offer hope for a brighter economic outlook in the region.