STUDY ON PRIVATE DEBT MARKETS IN AFRICA

The report assesses the private debt landscape in Africa, noting that while the market is growing, it remains heavily dominated by Development Finance Institutions (DFIs) and Multilateral Development Banks (MDBs), primarily in hard currency. It highlights a significant gap in local institutional investor participation due to regulatory constraints, risk aversion, and a lack of local currency vehicles. The study provides detailed analysis of focus markets—Nigeria, Kenya, Ghana, and Morocco—and uses South Africa as a reference for a more developed financial sector. Key recommendations include the introduction of credit enhancement facilities, improved data transparency, and the creation of local currency investment vehicles to reduce foreign exchange risk for borrowers and attract domestic pension funds.

• Private debt in Africa is dominated by Development Finance Institutions (DFIs) and Multilateral Development Banks (MDBs), which has led to a prevalence of hard currency denominated transactions, increasing foreign exchange risk for local enterprises.
• Between 2015 and H1 2021, total private debt transactions in Africa were identified at USD 193Bn, but when excluding commercial bank and lender syndicate transactions, the total drops to USD 37.5Bn, and further to USD 8Bn when MDBs and DFIs are excluded.
• The ratio of private debt to GDP varies significantly across focus markets; when MDBs and DFIs are excluded, the adjusted ratios are 0.08% for South Africa, 0.10% for Nigeria, 0.11% for Kenya, 0.07% for Ghana, and 0.01% for Morocco.
• In Nigeria, institutional investors show a desire for diversification and USD exposure to hedge against inflation, but pension fund participation is limited by guidelines that restrict investments to listed instruments with a minimum BBB rating.
• Kenyan institutional investors have a low appetite for riskier private debt because government securities offer attractive, relatively risk-free returns, such as approximately 12% interest on 10-year treasuries.
• Ghana's private debt market is nascent and constrained by a history of financial institution collapses, leading to stringent regulations where alternative investments for pension funds are capped at 25% of assets under management.
• Morocco's credit market is skewed toward large blue-chip corporates, leaving the SME sector underserved due to informality in governance and a lack of tools to assess non-standard credit risk.
• The power and energy sector is a primary recipient of private debt across Africa, accounting for 77% of total transaction value when combined with oil and gas, financial services, and mining support services.
• Venture debt is an emerging but small asset class in Africa; in 2021, 37 tech start-ups raised USD 767m in debt, with fintech start-ups accounting for over 54% of that funding.
• ESG factors are generally not primary drivers for investment decisions among local institutional investors in Nigeria, Kenya, and Morocco, who prioritise financial returns and risk management.

APA

FSD Africa (2022). STUDY ON PRIVATE DEBT MARKETS IN AFRICA. https://fsdafrica.org/wp-content/uploads/2025/05/FSD-Africa-Private-Debt-Markets-Study-Report.pdf

Chicago

FSD Africa. STUDY ON PRIVATE DEBT MARKETS IN AFRICA. 2022. https://fsdafrica.org/wp-content/uploads/2025/05/FSD-Africa-Private-Debt-Markets-Study-Report.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=STUDY ON PRIVATE DEBT MARKETS IN AFRICA |date=September 2022 |url=https://fsdafrica.org/wp-content/uploads/2025/05/FSD-Africa-Private-Debt-Markets-Study-Report.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafrica2022study, author = {{FSD Africa}}, title = {{STUDY ON PRIVATE DEBT MARKETS IN AFRICA}}, institution = {FSD Africa}, year = {2022}, month = sep, url = {https://fsdafrica.org/wp-content/uploads/2025/05/FSD-Africa-Private-Debt-Markets-Study-Report.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }