Africa's Corporate Bond Market: Shrinks to KSh 4.55T as Local Currency Borrowing Stays ThinAfrica's Corporate Bond Market: Shrinks to KSh 4.55T as Local Currency Borrowing Stays Thin

The finding matters for Kenyan firms because deep local bond markets are one of the cheapest ways to borrow for the long term without taking on exchange-rate risk. The shallower the market, the more companies lean on bank loans and foreign currency debt, and the more exposed they are when the shilling or interest rates move.

A market that has shrunk, not grown

The OECD Africa Capital Markets Report 2026 puts outstanding market-based corporate debt across the continent at about KSh 27.41T ($211B) at the end of 2025. The corporate bond segment, at KSh 4.55T ($35B), is the part that has contracted most, and the OECD mainly blamed reduced activity in South Africa.

Companies across the continent issued no more than 20 bonds in 2025, and 17 of them came from financial firms. That leaves manufacturers, retailers and infrastructure developers largely outside the market.

Concentrated in six countries

Egypt, Mauritius, Morocco, Mozambique, Nigeria and South Africa together account for 80% of outstanding corporate debt. The estimate covers all 54 African countries and draws on LSEG bond and loan records and Preqin private credit fund data.

Only 17% of corporate debt issued in 2025 was denominated in local currency. For a borrower earning in shillings, naira or rand, a dollar-denominated bond turns a currency slide into a bigger repayment bill.

Why the market stays shallow

The OECD said the main obstacles to bond market development are economic and institutional rather than technical. The factors most closely linked to deeper bond markets are regulatory quality, the rule of law, exchange-rate stability and well-developed pension funds.

The report also notes that aid to sub-Saharan Africa from OECD donor countries fell by more than a quarter in 2025, according to preliminary data, which raises the pressure on governments and firms to find domestic sources of long-term money. The OECD called for what it described as "a broad, whole-of-government approach" to widen access to long-term finance.

What it means for Kenya

The OECD figures are continental, and the summary does not break out Kenya's corporate bond market, so Kenyan readers should treat them as context rather than a country verdict.

As Mwenendo earlier reported on how NSE bond trading works, corporate bonds and government debt both trade on the Nairobi Securities Exchange, which gives Kenyan firms a route to local-currency funding that many African markets lack.

Mwenendo also covered the pull of share offers on the NSE, where equity rather than bonds was the route chosen by a large retailer to raise KSh 15B ($115M). Whether more Kenyan companies turn to local bonds will decide how much of that borrowing stays in shillings.