Africa’s $211 Billion Corporate Debt Market Exposes Deep Financing Gap, OECD Finds

Africa’s corporate debt markets remain too small to meet the continent’s long-term investment needs, with outstanding market-based corporate borrowing amounting to $211 billion at the end of 2025, according to a new report by the Organisation for Economic Co-operation and Development (OECD).

The Africa Capital Markets Report 2026, released on 6 November, finds that the continent accounts for 2.7% of global gross domestic product but only 0.3% of global corporate debt. The disparity illustrates how limited access to long-term market financing continues to constrain business expansion and investment.

Loans dominate, while bond markets lag

According to the OECD’s corporate debt analysis, syndicated loans account for 81% of outstanding corporate debt. Corporate bonds total approximately $35 billion, a market 44% smaller in inflation-adjusted terms than its 2015 peak.

Only 20 corporate bonds were issued across the continent in 2025, and 17 were issued by financial companies. The figures suggest that public debt securities remain an exceptional source of financing for most African non-financial businesses rather than a routine alternative to bank lending.

Debt markets are also concentrated geographically. Egypt, Mauritius, Morocco, Mozambique, Nigeria and South Africa account for 80% of the total, with South Africa alone representing about 30%. Companies in countries without established capital markets have fewer options to diversify their financing.

The local-currency problem

Just 17% of corporate debt issuance in 2025 was denominated in local currencies, the OECD finds. For companies that earn primarily in domestic currency, borrowing in dollars or euros can introduce substantial exchange-rate exposure. A depreciation can increase the local-currency cost of servicing foreign debt even when the company’s operating performance has not changed.

That risk is particularly relevant to businesses developing infrastructure, manufacturing facilities and other assets that require long repayment periods. Long-term investment is difficult to plan when the cost of financing can change sharply because of currency movements.

Developing local-currency debt markets could help reduce these mismatches. It could also create more opportunities for pension funds and insurers to invest domestic savings in productive enterprises, provided that suitable securities, regulatory safeguards and credible issuers are available.

Smaller companies remain excluded

The OECD observes that typical corporate bond and syndicated loan transactions are larger than comparable transactions in emerging markets more broadly. This favours large companies and financial institutions while leaving many smaller firms dependent on direct bank lending.

For growing manufacturers, agribusinesses and service companies, access to long-term financing can determine whether an expansion project proceeds. Short loan tenors and expensive borrowing may discourage investments whose returns emerge over several years.

Private credit has expanded, with Africa-focused funds’ assets under management increasing from $2.2 billion in 2020 to $5.5 billion in 2025. Yet some of that capital remains uninvested, highlighting a distinction between investor appetite and the availability of transactions that meet financing requirements.

Why market reforms must go beyond trading systems

The OECD argues that the main obstacles to corporate bond market development in less-developed markets are often macroeconomic and institutional rather than purely technical. Regulatory quality, rule of law, exchange-rate stability and pension-system development are strongly associated with deeper markets.

Establishing a trading platform is therefore not sufficient on its own. Investors also need reliable financial disclosures, predictable rules, credible legal enforcement and confidence that inflation and currency instability will not erode returns.

Government borrowing can play a constructive role when it establishes reliable benchmark yield curves. But heavy concentration of institutional portfolios in sovereign securities can also leave fewer resources available for private companies. Policymakers face the challenge of creating an environment in which both public and corporate financing can develop sustainably.

Capital markets and economic resilience

The report’s executive summary notes that Africa’s equity markets have shown momentum, but market activity remains relatively small, illiquid and concentrated. It also points to barriers to new listings and the limited supply of investable securities.

Deeper capital markets could help African economies withstand periods when global lenders become more cautious. Companies with access to several sources of financing may be better positioned to maintain investment when credit conditions tighten.

The OECD’s findings do not suggest that bond markets can replace banks. Rather, they indicate that a more diversified financing system, supported by strong institutions and stable economic policy, could give African businesses a wider range of options.

For a continent seeking to expand industrial production, modernise infrastructure and create jobs, the $211 billion figure is a measure not only of current market activity but also of how much financial development remains to be achieved.

Sources: OECD, Africa Capital Markets Report 2026; OECD, Developing Africa’s Corporate Debt Markets for Growth; OECD executive summary.