Dangote: Dollar, interest rates threaten Africa’s development spending

A strong US dollar, high global interest rates and rising external debt are increasing pressure on African currencies and squeezing government spending on development, even as the continent’s economy continues to show resilience.

This is according to Dangote Group’s first-half 2026 Economic Report, which identified tight external financing conditions as a major risk to Africa’s economic outlook.

The report warned that countries with heavy external debt and large energy import bills face growing pressure on their currencies, public finances and household incomes as borrowing costs rise and import expenses increase.

It said the combination of a strong dollar, expensive global credit and substantial external debt could force governments to devote more resources to debt servicing at the expense of infrastructure 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.

The report expects external financing conditions to remain tight for African governments in the second half of 2026, leaving countries with weaker external positions more exposed to currency instability and fiscal pressures.

Energy-importing economies with large foreign debt obligations are particularly vulnerable, while energy exporters with credible economic policies could benefit from stronger trade balances and rebuild their financial buffers.

Despite the financing challenges, the report said Africa’s economy remained resilient in H1 of 2026, although growth varied considerably across regions and countries.

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 ranging between four and five per cent, while Nigeria’s economic growth settled at around four per cent.

South Africa remained the weakest performer among the continent’s major economies, growing at approximately two per cent.

The report attributed the country’s sluggish performance to persistent electricity shortages and logistics bottlenecks, which continue to constrain production and economic activity.

Changes in global commodity prices have further widened the economic divide between African countries, depending on whether they export or import energy and other major commodities.

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Oil and gas exporters have benefited from higher energy prices through increased export earnings and government revenue. Energy-importing countries, however, have faced higher fuel and fertiliser costs, adding to inflation and reducing household purchasing power.

The report also highlighted the importance of cocoa and gold to West African economies.

Cocoa prices retreated sharply from their earlier surge, potentially weakening export earnings and government revenue in Côte d’Ivoire and Ghana, two major producers.

Gold prices, although below their January record, remained historically elevated, supporting producers such as Ghana and providing an important reserve asset for central banks managing currency pressures.

Higher fertiliser prices also pose a risk to food prices across the continent, potentially increasing the cost of agricultural production and worsening inflationary pressures.

Currency movements during H1 of 2026 reflected differences in countries’ external positions and the credibility of their economic policies.

The report said the naira appreciated by around 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 approximately 11 per cent, while South Africa’s rand remained broadly flat over the same period.

The report linked these differences to variations in countries’ external balances, commodity exposure and macroeconomic frameworks.

It argued that countries with credible economic policies and favourable commodity exposure were better positioned to withstand global financial pressures.

Economies with large import bills and substantial external debt, however, remain more vulnerable to currency depreciation, inflation and pressure on government finances.

Dangote Group expects economic growth across Africa to remain resilient in H2 of 2026, led by West and East African economies.