It is essential to raise additional finance if Africa is to achieve the SDGs. An economist from the UN Economic Commission for Africa explains how the organisation helps countries improve their credit ratings and search out innovative ways of financing.

The combination of the coronavirus pandemic, the war in Ukraine and climate change is hampering the efforts of African countries to achieve the Sustainable Development Goals (SDGs) and has created the need to find additional financing if the SDGs are to be rescued.

According to the IMF (2021), Africa’s additional financing needs amount to $285bn between 2021 and 2025. The continent also needs an additional $345bn annually for SDG implementation due to the pandemic.

Therefore, to rescue the SDGs and raise the necessary additional financing will require recourse to innovative finance and capital markets.

However, African countries have almost always experienced difficulties in accessing international markets. This is partially explained by Africa’s often negative risk perception, as conveyed by sovereign credit ratings. As it is, only two African countries have been able to issue Eurobonds in the first half of 2023.

Over the first half of 2023, the trend for negative ratings, including downgrades and negative outlooks has continued. From the credit rating agencies’ perspective, these downgrades or negative outlooks are based on their assessment of risk factors such as governments’ increasing financing needs, financial pressures related to the upcoming “2024 wall of Eurobond maturities”, the weakening of the external liquidity position, the high cost of debt service and finally, the high yields on the Eurobond financial markets.