Africa is losing as much as $75 billion each year due to distorted perceptions of sovereign risk that inflate borrowing costs and depress investment returns, as reported by Bloomberg.

Speaking at an investor forum in Johannesburg on Wednesday, the president of Africa Finance Corporation (AFC), Samaila Zubairu, said financial markets continue to apply what he called a “prejudice premium” to African sovereign debt, despite evidence that the continent’s actual default rates are no higher than those of similarly rated peers.

“These default rates are exaggerated,” Zubairu said. “The prejudice premium Africa has paid is $75 billion annually. That’s a lot of money.”

His comments reflect mounting frustration among African economic leaders who argue that outdated risk models and incomplete data are leading to unjustifiably high debt servicing costs across the continent.

AFC’s concern aligns with recent research from Moody’s Ratings, which found that Africa’s default rates broadly match those of other sovereigns in the same rating bracket. Yet spreads on African debt remain significantly higher.

According to World Bank data, Africa recorded the second-lowest default rate on infrastructure loans globally during the decade leading up to 2020. Still, investors demand a 9.8% yield on average for African sovereign bonds, compared to 6.5% for Latin America, said Ndidi Okonkwo Nwuneli, president of the One Campaign, who also spoke at the event.

“For the last three decades, return on infrastructure investments in Africa was six times that of the Standard & Poor's 500 Index (S&P 500),” she said. “Yes, there is risk. But there is a return.”

Zubairu called for greater data transparency and improved statistical reporting to shift investor perceptions and address longstanding credit rating asymmetries. African governments and corporations have repeatedly accused major agencies — including Moody’s, Fitch, and S&P Global — of applying inconsistent and sometimes opaque frameworks to the continent.

“We need to have a program whereby we’re putting out more data on our actual economy and the performance of the various components of the economy,” Zubairu said.

He also urged governments to accelerate efforts to bring the informal economy into the formal financial system, arguing that wider coverage would help demonstrate economic resilience more accurately. “All of this will help in providing information that things are not as they say,” he added.