“Africa’s corporate debt markets remain significantly underdeveloped, with market-based debt totalling just $211 billion at the end of 2025, according to the OECD, limiting access to long-term financing for businesses across the continent. South Africa, one of Africa’s principal financial markets, is central to efforts to expand corporate bond financing, improve investment opportunities and strengthen economic resilience against international financial shocks.”
Africa’s Corporate Debt Markets Remain Shallow as OECD Warns of Financing Constraints
Africa’s corporate debt markets remain significantly underdeveloped relative to the continent’s economic importance and growing financing requirements, raising concerns about businesses’ ability to secure affordable long-term funding and withstand global financial shocks. A report published by the Organisation for Economic Co-operation and Development (OECD) has highlighted the structural limitations of corporate debt financing across Africa, with South Africa occupying a particularly important position in discussions about financial market development.
According to Reuters reporting published on November 6, the OECD estimated that Africa’s outstanding market-based debt totalled approximately $211 billion at the end of 2025. The organisation warned that insufficient corporate financing opportunities could undermine economic expansion and efforts by African governments to strengthen domestic financial systems.
The findings place renewed attention on South Africa’s financial sector, Johannesburg’s capital markets and the country’s role in providing financing opportunities for businesses operating across the continent.
Corporate Debt Markets Remain Underdeveloped
The OECD’s Africa Capital Markets Report 2026 identifies a considerable gap between Africa’s financing requirements and the resources available through market-based debt instruments.
Corporate debt markets allow companies to raise money by issuing bonds and other financial instruments to investors rather than depending exclusively on bank loans, retained earnings or government support.
These financing arrangements are particularly important for businesses requiring substantial capital for infrastructure, industrial development, expansion and technological investment.
However, the OECD found that African capital markets remain underutilised as sources of long-term financing when compared with other emerging-market economies.
The report’s estimates draw on bond and loan transaction records from London Stock Exchange Group and private credit fund information from Preqin, covering all 54 African countries.
The findings suggest that Africa’s corporate financing challenges are not simply a consequence of insufficient investment demand. Instead, they reflect structural weaknesses in the availability, depth and accessibility of financial markets.
South Africa’s Importance in African Capital Markets
South Africa remains one of the continent’s most developed financial markets, with established banking institutions, institutional investors, investment management companies and the Johannesburg Stock Exchange.
Its financial infrastructure provides opportunities for companies to raise capital, trade securities and access sophisticated investment services.
Nevertheless, the OECD’s findings indicate that even established African financial markets face challenges in supporting corporate borrowing and long-term investment at the scale required.
South Africa’s corporate bond market is particularly relevant to the wider continental financing debate.
The OECD estimated Africa’s corporate bond market at approximately $35 billion, describing it as 44% smaller in inflation-adjusted terms than its 2015 peak.
The organisation attributed much of this contraction to reduced activity in South Africa.
This development highlights the importance of revitalising corporate bond issuance and expanding financing opportunities for businesses across the region.
Limited Bond Issuance Restricts Financing Opportunities
Corporate bonds provide companies with an alternative source of funding while offering investors opportunities to earn returns through interest payments.
Companies can use bond proceeds to finance infrastructure projects, acquire equipment, expand production capacity, refinance existing obligations and support business development.
However, the OECD reported that African companies issued no more than 20 bonds during 2025, with financial firms accounting for 17 of those transactions.
This concentration illustrates the relatively limited participation of non-financial businesses in African corporate debt markets.
The report also found that six countries—Egypt, Mauritius, Morocco, Mozambique, Nigeria and South Africa—accounted for approximately 80% of outstanding corporate debt.
Although these markets represent a substantial proportion of African corporate borrowing, their concentration also highlights the uneven development of financing opportunities across the continent.
For South Africa, expanding participation by industrial companies, infrastructure operators and smaller businesses could help broaden the corporate debt market.
Financial Resilience During International Market Disruptions
The OECD’s warning extends beyond financing shortages during normal economic conditions.
International financial markets can become volatile during periods of geopolitical uncertainty, rising interest rates, currency instability and investor risk aversion.
During such periods, international lenders frequently reduce exposure to economies perceived as vulnerable, making it more difficult for businesses to secure funding.
African governments and companies therefore face the challenge of building financial systems capable of supporting investment even when international capital becomes less accessible.
Domestic capital markets can contribute to that resilience by mobilising savings within African economies and connecting investors with productive businesses.
South Africa’s established institutional investment sector provides a potential foundation for strengthening these financing channels.
Pension funds, insurance companies, asset managers and other institutional investors can participate in corporate debt markets, subject to their investment mandates, risk assessments and regulatory requirements.
However, expanding market participation requires credible borrowers, transparent financial reporting, reliable repayment structures and sufficient investor confidence.
Implications for South African Businesses
The development of corporate debt markets has important implications for South African companies operating in sectors such as manufacturing, infrastructure, telecommunications, energy, logistics and property.
Businesses that rely heavily on bank lending may face financing constraints when borrowing costs increase or lenders tighten credit requirements.
Corporate bonds can provide another financing option, potentially allowing companies to diversify funding sources and negotiate financing structures suited to long-term investment projects.
Nevertheless, issuing bonds is not equally practical for every business.
Large companies generally possess greater financial reporting capacity, established credit histories and resources to meet issuance requirements.
Smaller businesses often face higher financing costs, limited access to institutional investors and insufficient capacity to navigate capital market regulations.
Consequently, expanding corporate debt markets requires measures that improve access without weakening investor protections.
Opportunities for Institutional Investors
A stronger corporate debt market could also create additional investment opportunities for South African institutional investors.
Investors traditionally allocate funds across government securities, corporate bonds, equities, property and other financial instruments.
Corporate debt offers opportunities to diversify portfolios while supporting business investment.
However, investors must carefully evaluate credit quality, repayment capacity, liquidity and the risks associated with individual issuers.
Market development should therefore be accompanied by stronger credit assessment mechanisms and reliable financial disclosure.
These safeguards are particularly important when encouraging investment in businesses with limited operating histories or uncertain revenue prospects.
Financial Regulation and Market Infrastructure
The expansion of corporate debt financing depends substantially on financial regulation and market infrastructure.
South Africa’s established financial regulatory framework provides a foundation for securities issuance, investor protection and market supervision.
Nevertheless, improving financing opportunities may require continued attention to issuance costs, transaction complexity, market liquidity and access to information.
Efficient market infrastructure can make it easier for companies to issue securities and for investors to evaluate investment opportunities.
Regional cooperation may also support cross-border investment by improving financial market connectivity and facilitating participation by investors from neighbouring countries.
Such initiatives could strengthen South Africa’s position as a regional financial centre while supporting broader African economic integration.
The Role of Economic Growth
Corporate debt market development is closely connected to economic growth.
Businesses are more likely to seek financing when they anticipate opportunities to expand production, increase sales and improve profitability.
Conversely, weak economic growth can reduce investment demand and make investors more cautious about lending.
South Africa’s financing environment is therefore influenced by broader economic conditions, including electricity reliability, logistics performance, consumer demand, inflation and borrowing costs.
Improving these conditions could encourage businesses to invest and create additional demand for long-term financing.
However, financial market development alone cannot guarantee stronger economic performance.
Investment opportunities must be supported by productive projects, sound business management and policies that encourage sustainable economic activity.
Strengthening Africa’s Financial Future
The OECD’s findings underline the importance of developing financial markets capable of supporting Africa’s expanding financing needs.
South Africa has an opportunity to contribute through its established banking system, capital markets and institutional investment industry.
Expanding corporate debt financing could help businesses diversify funding sources, support infrastructure investment and strengthen financial resilience.
At the same time, improving access to financing across Africa requires broader participation from companies, investors and financial institutions.
The development of deeper capital markets would also require greater transparency, stronger investor confidence and improvements in financial market infrastructure.
Ultimately, the challenge is to ensure that African businesses can access financing that supports productive investment rather than relying excessively on limited funding channels.
Outlook
The OECD’s assessment provides an important reminder that Africa’s corporate financing requirements continue to exceed the capacity of its market-based debt systems.
For South Africa, the findings highlight both the challenges facing corporate bond markets and the opportunities associated with expanding long-term financing.
A stronger financial system could support business investment, improve funding diversification and strengthen economic resilience.
The future development of South Africa’s corporate debt market will depend on investor confidence, regulatory effectiveness, business performance and the broader economic environment.
As policymakers and financial institutions consider ways to expand financing opportunities, the OECD’s report places corporate debt market development firmly among the priorities for Africa’s long-term economic growth.
