African nations continue to pay some of the highest borrowing costs in the world, even as global interest rates fall and investor appetite for emerging-market debt surges, Bloomberg reports.

Citigroup’s Daniel Lebetkin, who has overseen nearly 18 billion US dollars in African international bond sales this year, says the disparity reflects a “structural difference in yields.” While strong demand has allowed countries like Nigeria and Kenya to lower borrowing costs, Nigeria’s 10-year debt sold at 8.625 percent this month, down from 10.375 percent in December, investors still demand higher yields compared with other emerging markets.

The gap is attributed in part to historical defaults, political volatility, governance concerns, and the small scale of African issuers. South African Finance Minister Enoch Godongwana points to what he calls a broader bias, noting that countries with comparable fiscal metrics often receive better ratings. Africa Finance Corp. estimates this “prejudice premium” could add up to 75 billion US dollars in extra annual borrowing costs.

Data illustrate the disparity: Kenya’s 12-year bonds last month sold at 9.2 percent, while Bahrain, with a similar rating, issued debt at 6.625 percent. Ghana, which defaulted in 2022, now trades 10-year bonds just above 6 percent, reflecting cautious investor confidence in government efforts to restore fiscal credibility.

Despite the higher yields, investor interest remains robust. Recent eurobond sales for Nigeria and Kenya were oversubscribed five times, underscoring demand and allowing issuers to reduce costs. According to JPMorgan data, the average extra yield for African dollar bonds over US Treasuries now stands at 3.7 percentage points—the lowest since 2018—but remains higher than Latin America (3.2), emerging Europe (2.2), and emerging Asia (0.8).

Analysts say the premium cannot be explained solely by default risk. Moody’s data suggest African sovereigns carry similar default probabilities to comparably rated nations, implying other factors, such as data scarcity and limited market familiarity, contribute. Isaah Mhlanga, chief economist at FirstRand Ltd., notes investors tend to add a cautionary premium when reliable data are lacking.