Excluded from global capital markets, African sovereigns are increasingly relying on local financing.

Egypt, Zambia, Mozambique, and mid-restructuring Ghana face the most challenging domestic financing conditions on the continent, according to S&P Global Ratings' Domestic Debt Index (DDI).

Geopolitical uncertainty, dollar strength, and persistent inflation have pushed up domestic policy rates, raising the costs and shortening the maturities of domestic financing in Egypt, Kenya, Uganda, and Zambia.

While nonresident outflows in local bond markets have raised domestic banks' exposure to sovereign credit risk, banking systems vary in size. Total financial sector assets range from just 25% of GDP in the Democratic Republic of the Congo (DRC) to 361% in Mauritius.

Report by S&P Global