The global rating agency pointed out that the average debt of sub-Saharan African governments increased from 58% in 2019, to 66% of GDP in 2020 and is expected to peak at 73% in 2022.

After an unprecedented number of downgrades in African country ratings in 2020 in response to rising government debt and liquidity challenges resulting from the Covid-19 pandemic, the Sub-Saharan Africa (SSA) annotation has turned more positive in 2021, with three upgrades (Benin, Ivory Coast, and Gabon) and one downgrade (Ethiopia) since the start of the year (2021).

Even with that rise, the outlook remains negative. The Fitch report, cited by an African markets website, downgraded Ghana (June) and Rwanda (July) to negative, while Kenya, Lesotho, Namibia, Rwanda, South Africa and Uganda maintained negative outlooks, which according to the report, reflect uncertainty about whether these countries will be able to stabilize and reduce their debt levels, as well as the risks to achieving external liquidity in an environment of constrained global financing conditions.

Some sharp increases in debt/GDP ratios were due to the effects of lower oil prices that affected exporters, but which the recovery will help to reverse.

Also according to Fitch ratings, the pandemic continues to affect revenues and expenditures in many governments and long-term challenges persist, including weak public financial management and a heavy reliance on growth driven by public investment.

Fitch stressed that unlike other regions, it does not expect a strong recovery in SSA, in part because support from government stimulus is more limited given funding constraints.

It also considers that the risks of further waves of Covid-19 will remain high, given low vaccination rates, although the economic impact may remain contained as economies and governments have learned to adapt.

Fiscal consolidation efforts may also weigh positively on the long-term growth trend.