Africa’s lending and capital markets are entering a more constructive phase due to improved global liquidity and increased investor appetite, but debt sustainability concerns across the continent remain a persistent challenge, said Nalitha Balgobind, head of debt for Africa at Absa Corporate and Investment Banking.
In an exclusive interview with NewsGhana after the first Loan Markets Association (LMA) and International Capital Markets Association (ICMA) Annual Africa Summit in Cape Town, Balgobind detailed the forces reshaping the way African governments and businesses access finance.
He said recent eurobond issues by Benin, Nigeria, Egypt and Ivory Coast were all oversubscribed, providing the clearest sign yet that appetite for African bonds was returning. But the structural changes occurring beneath that headline trend are just as important.
Balgobind described cross-border syndicated lending as a market in which international banks, development finance institutions (DFIs), regional financial institutions, and private creditors are increasingly pooling capital to finance infrastructure, mining, energy, and telecommunications deals on a scale that cannot be supported by domestic markets alone. He noted that African borrowers benefit from long borrowing terms and competitive pricing that reflects global rather than regional credit conditions, adding that regional banks are now actively leading syndicated transactions and driving capital flows to the continent.
Asked why corporate bond markets remain underdeveloped relative to Africa’s economic growth, Balgobind pointed to structural and macroeconomic constraints that vary by country. Borrowers across the continent have traditionally preferred loan markets where relationships with banks tend to offer flexible terms and competitive pricing. He explained that bonds are considered more demanding, requiring broader disclosure, formal credit ratings and stricter compliance with laws and regulations.
On blended finance, she spoke candidly about its continued relevance. Given the huge infrastructure needs across the continent, commercial financing alone cannot meet them. The blended structure allows projects to access international capital markets while leveraging credit enhancements that reduce risk for investors.
The evolution to multi-vehicle financing models, where a single project or company simultaneously raises funds from syndicated loans, bonds, development finance, export credits, and private equity, has made it possible to finance larger and more complex transactions that cannot be supported by a single source of financing.
The summit brought together over 1,000 senior stakeholders including issuers, investors, regulators, DFIs and banks, and focused on capital market development, sustainable finance, blended finance and market infrastructure across Africa’s loan and debt markets.
On the policy front, Balgobind’s prescription is straightforward: governments need to create conditions that attract foreign investment through macroeconomic stability and a reliable regulatory and legal framework.
The long-term benefits are significant, she said. Greater adoption of syndicated financing, expansion of blended finance, and deepening of bond markets represent structural changes in Africa’s financial systems and will accelerate Africa’s economic transformation and diversify the financing base on which that transformation depends.
Narisa Balgobind is Head of Debt in Absa Corporate and Investment Banking’s Africa practice.
