Senegal

Senegal is undoubtedly the region’s most troubled credit. A hidden debt revelation added 25 percentage points to the debt-to-GDP ratio, pushing it to over 105% by the end of 2024. The situation is precarious. Historically, few countries have been able to reduce their debt ratios from such levels without a restructuring of either the external or domestic debt. Big decisions await. Unsurprisingly, investor interest in Senegal has surged. As a member of the Ministry of Finance confirmed during our meeting: “We’ve seen more investors passing through Dakar in the first two months of 2025 than we did in all of 2024”.

The ruling party, PASTEF, was elected on a populist platform. Removing fuel subsidies and cutting capital expenditure to secure multilateral financing will be deeply unpopular with the electorate. Despite this, we believe policymakers will stomach the potential backlash and make the tough choices necessary to keep the International Monetary Fund (IMF) and others on their side. For now.

Key takeaway: Senegal will likely muddle through the next 6-12 months with support from the IMF, World Bank, and expensive bridge financing. However, the country could hit a wall in 2026 if the government fails to cut expenditures or raise revenues quickly enough.

Ivory Coast

After the chaos of Dakar, it was a relief to move to a calmer, albeit more humid, Abidjan. It is not an overstatement to say that Ivory Coast is enjoying a purple patch. Real GDP growth consistently exceeds 6%, driven by offshore oil production, the discovery of extensive gold deposits, and last year’s construction boom in the run-up to the African Cup of Nations.

Our discussions on the trip were dominated by the upcoming presidential race, with citizens going to the polls in October. Elections in Africa are rarely sedate affairs, and Ivory Coast is no different. Incumbent President Ouattara is weighing up whether to run for a controversial fourth term. But, despite two civil wars in the past 25 years, there’s little appetite for domestic unrest and there’s no radical opposition poised to break through.

Key takeaway: should he decide to run, Ouattara is likely to secure a fourth term. The checks and balances in place ought to help curtail excess spending in the lead-up to the vote. We'll be watching for bouts of market weakness ahead of the election to potentially increase our exposure.

Gabon

From Abidjan, we journeyed into central Africa and Gabon. One family had ruled for over five decades, but green shoots are starting to appear following the removal of former President Ali Bongo. Governance reforms will take time, but the Gabonese are making positive strides – we frequently heard that relations with commercial, bilateral, and multilateral lenders are improving. However, the size of the debt arrears remains a significant issue. No one really knows the true number, and the debt stack has been growing as construction projects, supported by the transitional government, spring up around Libreville. Meanwhile, oil production is on a naturally depleting path.

A potential source of revenue is manganese. Gabon has the second-largest reserves of the mineral in the world but lacks the infrastructure to export it. To address this, the country is seeking investment to expand its rail network. Success here could see its credit yield of around 12% fall to towards single digits.

Key takeaway: following the Presidential election at the beginning of April, the government will likely commit to curtailing spending and reducing the size of its arrears. However, the investment case for Gabon will remain challenging until there is some transparency over the fiscal numbers. 

Image: Elections are fast approaching in Gabon 

Cameroon

Our final stop was Cameroon and Yaoundé. The government has finally agreed to hire a consultant to determine the economic viability of the heavily indebted Sonara oil refinery. This is important because most of the country’s domestic debt arrears can be attributed to the refinery. Cameroonian banks own 90% of the refinery’s equity. Any restructuring of Sonara should give the government more refinancing options and allow it to inject much-needed liquidity into the local market.

Meanwhile, proceeds from an upcoming Eurobond issuance will help to clear domestic arrears, and according to various ministries, there are no external arrears. Speaking to political analysts in the country, it was clear the legacy that 92-year-old President Biya will leave behind. The country is at peace, and he wants to ensure stability will prevail when he is no longer president.

Key takeaway: Cameroon's fiscal position is strong, with the external account in good shape and debt levels benign. Succession planning remains unclear, but, as one journalist told us:

Final thoughts…

This was another productive trip, underscoring the value of firsthand meetings and on-the-ground insights. We return with a clearer picture of each nation, including outlooks for their respective debt markets. As ever with frontier bonds, there are significant challenges and compelling opportunities, reaffirming our conviction in this compelling asset class.