Rating agency Moody’s, which downgraded seven sub-Saharan African countries last year, expects pressures that led to the downgrades to go on this year.
Moody’s has a negative outlook for sub-Saharan Africa as a region, citing liquidity stress, low economic growth rates and political risk.
The region’s economies "will continue to face commodity-induced liquidity stress in 2017, with recurring fiscal deficits amid challenging financing conditions", says Moody's vice-president Lucie Villa.
Villa is also a senior analyst and co-author of the agency’s latest report on the region.
"These will remain important credit constraints and underpin our negative outlook for Sub-Saharan Africa sovereigns overall," she said.
Moody’s issues ratings on 19 countries in the region, and last year downgraded seven by two notches on average. Five still carry negative outlooks, meaning they could be downgraded again.
The three major agencies — Moody’s, Fitch and S&P Global Ratings — gave SA a reprieve at the end of last year.
Moody’s says oil-and commodity-induced liquidity stress will be felt most acutely in Gabon, Mozambique, Republic of the Congo and Zambia, and to a lesser extent in Angola and Nigeria. But low oil prices will benefit East African countries such as Uganda, Kenya and Rwanda.
Moody’s expects some positive effects from fiscal consolidation plans in most of the countries it rates but says they will run into headwinds from "subdued growth, related social demands and potential shocks from the weather and geopolitics".
This is despite a forecast for economic growth to rise to 3.5% this year from an estimated 1.5% last year.
Growth in powerhouses Nigeria and SA, is expected to remain subdued. Rapid growth is expected in Ethiopia, Ivory Coast and Senegal.
Political risk clouds the outlook for Democratic Republic of Congo and Rwanda, where coming elections create scope for civil unrest, says Moody’s.