Africa’s local currency debt capital markets are on the rise. Across the continent, ongoing regulatory reforms have unleashed a more powerful constituency of institutional investors just as currencies in the region have collapsed in value against the dollar, driving up the cost of non-locally denominated borrowing. Together, these trends have accelerated the growth of sub-Saharan African capital markets in a profound way, with local currency debt markets now on the path to becoming deeper and more diversified.
This progress marks an encouraging departure from the historical norm. “In previous years, local currency debt markets across sub-Saharan Africa were very shallow. Any debt issuance that did occur was usually dominated by government transactions. In the past 18 months, however, we have seen a dramatic change,” says Megan McDonald, global head of debt primary markets with South Africa’s Standard Bank.
