Overview and context of debt in Africa

The public debt of African countries has increased sharply over the last decade, as a result of successive shocks (2008 financial crisis, fall in commodity prices, Covid-19 pandemic, war in Ukraine) . In 2022, Africa’s total public debt reached around $1.8 trillion, an increase of 183% since 2010 . The share of external debt (debt owed to foreign creditors) has also increased: as a percentage of African GDP, it rose from around 19% in 2010 to almost 29% in 2022 , reaching 41.6% of continental GDP in 2023 compared to 18.8% in 2008 . In absolute terms, Africa’s external debt was estimated at $1,120 billion in 2022, and $1,152 billion at the end of 2023. Servicing this debt (repaying interest and principal) is becoming increasingly burdensome: Africa is expected to pay $163 billion in debt servicing in 2024 alone, compared to $61 billion in 2010. This growing burden is mobilizing resources to the detriment of investments in health, education, and infrastructure, threatening the Sustainable Development Goals.

Furthermore, after the massive cancellations of the 2000s (HIPC Initiative and multilateral debt relief), many countries have started borrowing again. More than 25 African countries now have a level of debt deemed excessive or are at high risk of over-indebtedness. According to the World Bank, in April 2023, 22 countries on the continent were either in debt distress or at high risk of falling into it. Examples include Ghana and Zambia, which have defaulted on their sovereign debt, and Malawi and Chad, which are receiving financial assistance from the IMF. More generally, the number of African countries with public debt above the 60% of GDP threshold (often used as a benchmark for sustainability) has increased from 6 in 2013 to 24–27 countries in recent years. Some extreme cases include Sudan (whose debt recently reached around 280% of GDP) and Eritrea (over 150%) – levels that are difficult to sustain without restructuring. Finally, African debt is highly concentrated: in 2023, just 10 countries held 67% of the continent’s external debt (the main ones being large economies such as Egypt, South Africa, Nigeria, Morocco or Angola).

Main sources of debt: types of creditors

The structure of Africa’s creditors has diversified over the past 20 years, with a notable shift from traditional public creditors to emerging and private players. Three main categories of lenders can be distinguished:

• Bilateral creditors: these are loans granted directly by other countries. Historically, Africa’s main bilateral donors were members of the Paris Club (United States, France, United Kingdom, Japan, etc.) via development agencies or export credits. After the cancellations of the 2000s, the share of these traditional creditors has declined. Since the 2010s, China has established itself as Africa’s leading bilateral creditor. Chinese banks and public institutions hold around $62 billion in African public debt in 2023, or nearly half of the debt owed to bilateral creditors. By some estimates, China alone accounts for about 12-17% of Africa’s total external debt. Other notable bilateral creditors include India, the Gulf countries, and former Western partners (for example, France remains a major creditor to some Francophone countries through the AFD). Bilateral loans can finance infrastructure, often on preferential terms (concessional loans), but also commercial credits. Overall, bilateral debt accounted for about 23-27% of recent African external debt – a sharp decline from about 50% in 2000.

• Multilateral creditors: These are the international and regional financial institutions that lend to states. The main ones for Africa are the International Monetary Fund (IMF), the World Bank (IBRD and especially the IDA for poor countries) and the African Development Bank (AfDB), but also other regional banks (BOAD in West Africa, BCEAO, etc.) and institutions such as the Islamic Development Bank. These multilateral loans are often concessional (low rates, long maturities) and target development projects or budget support. After the Covid-19 pandemic, the IMF and the World Bank have significantly increased their emergency financing to help countries cope with shocks. For example, the WB and other multilateral donors injected an additional $51 billion in 2022-2023 into poor countries, while private creditors withdrew net capital. As a result, multilateral institutions have become crucial again, playing a role as lender of last resort for many African countries in difficulty. Today, about 30-34% of Africa’s external debt is owed to multilateral creditors. For comparison, this share was about 28% in 2000 (so it has remained relatively stable). The largest multilateral holders of African debt include the World Bank and the IMF – for example, the World Bank held a share comparable to China’s in total African debt around 2022 (around 13%).

• Private creditors: This category includes international private investors, such as commercial banks, bond funds, and other financial institutions that lend to African governments. Specifically, this includes sovereign bonds (Eurobonds) issued by African governments on international markets, as well as commercial bank loans or special financing (e.g., resource-backed loans or commodity trading securities). Since the early 2010s, more and more African countries have tapped international financial markets, initially taking advantage of low global interest rates. By 2023, more than 20 African countries had issued Eurobonds, driving up the share of private creditors in the debt. Debt held by private entities now accounts for about half of African debt: 43–44% of the total, compared to just 20–30% a decade ago. This increase is significant – the private share increased from 30% in 2010 to 44% in 2021 – which means that Africa is increasingly dependent on non-concessional financing at market rates. However, these commercial loans have higher interest rates and shorter maturities, which increases the cost and risk of debt. For example, the average interest rate on African bonds is estimated at around 11-12%, reflecting a high risk premium compared to international reference rates. The rise of Eurobonds and other private loans also complicates debt management: these creditors are numerous, dispersed, and their financial interests may diverge from those of official donors.

Current distribution of debt by category of creditors.

In summary, African public external debt is now divided into three almost equivalent blocks: approximately 43% held by private creditors, 34% by multilateral institutions, and 23% by official bilateral creditors. This profile contrasts with that of 20 years ago, when the majority of the debt was owed to public creditors (States or institutions). China is emerging as the single largest bilateral creditor (ahead of countries such as France, Japan or India), while on the private side, large international investment funds hold a growing share of African bonds. This expansion and fragmentation of the creditor base complicates the resolution of over-indebtedness problems, as it is more difficult to coordinate so many actors with varied interests during restructuring discussions.

Recent trends in debt repayment and restructuring

Faced with the rise in insolvency risks, several initiatives have emerged in recent years to alleviate or reschedule the African debt burden:

• Debt Service Suspension Initiative (DSSI): In 2020, during the Covid crisis, the G20 set up the Debt Service Suspension Initiative to provide relief to the poorest countries. From May 2020 to December 2021, the DSSI allowed 48 eligible countries (including around 30 in sub-Saharan Africa) to defer payment of their instalments due to official bilateral creditors. In total, around $12.9 billion in debt payments were suspended thanks to the DSSI, which temporarily relieved the cash flow of beneficiary countries. While this initiative was beneficial in the short term, it was only a moratorium: the amounts due were postponed but not cancelled. However, coupled with other emergency measures, the DSSI has helped to temporarily stabilize debt ratios – for example, there has been a slight decline in African median public debt from 68% of GDP in 2021 to 65% in 2022, reflecting these suspensions and the infusion of international aid.

• G20 Common Framework for Debt Treatment: To go beyond the DSSI, G20 creditors (including for the first time China, India, Saudi Arabia alongside Paris Club countries) adopted in late 2020 a Common Framework to sustainably restructure the debt of eligible countries in difficulty. In Africa, four countries have formally requested restructuring through the Common Framework: Chad, Ethiopia, Zambia, and Ghana. However, implementation has been slow and laborious due to complex negotiations between a plurality of creditors (Western public, China, and private creditors all need to agree). To date, only partial progress has been made: Chad obtained a debt relief agreement from its creditors in 2022 (without debt reduction, rather a rescheduling conditional on an agreement with the IMF), and Zambia is the first case to have concluded a full restructuring agreement in 2023. After a default in 2020, Zambia negotiated with its official creditors (including China, France and others) a restructuring of $6.3 billion of external debt, involving a longer repayment period and a reduction in interest rates. For its part, Ghana – facing a liquidity crisis in late 2022 – undertook its own restructuring: it first carried out a domestic debt exchange (reducing coupons and extending the maturities of local bonds) before negotiating with its external creditors under the IMF-supported Common Framework. These experiences show that coordination between different lenders remains difficult, but essential to restore debt sustainability. Discussion forums such as the Global Sovereign Debt Roundtable (set up in 2023 by the G20, the IMF and the World Bank) are now trying to involve private creditors in joint discussions with official creditors, in order to accelerate and harmonize restructurings. Despite these efforts, restructurings take time and sometimes run up against the divergent interests of lenders (for example, private funds may be reluctant to accept losses, delaying agreements).

• Evolution of lending policies: On the creditors’ side, adjustments are also being observed. China, for example, after a decade of massive loans to Africa (as part of the New Silk Roads and bilateral financing), has significantly reduced the volume of its new loans since 2016 due to concerns about the risks of non-repayment and international pressure to participate in debt relief. Western creditors, for their part, are calling for greater transparency and coordination: the challenge is to integrate new donors (China, India, private) into the debt treatment mechanisms that historically existed (Paris Club, etc.). In addition, some proposals are emerging to improve debt management: for example, the AfDB has suggested innovative instruments (such as “blue bonds” or the use of international guarantees) to reduce the cost of African debt, and African voices are calling for the issuance of new Special Drawing Rights (SDRs) from the IMF or the reallocation of those not used by rich countries, in order to provide liquidity to indebted countries without further increasing their debt. Finally, another debate concerns the extension of maturities: it is stressed that financing long-term infrastructure with short-term loans is problematic. African leaders, such as former Senegalese President Macky Sall, are calling for granting African countries loans with a duration of at least 20-30 years for development projects, in order to avoid repayments suffocating the economy before the benefits of investments are even realized.

Highly Indebted Countries and Economic Implications of Debt

Several African countries stand out for their particularly high debt levels. Some have the highest debt-to-GDP ratios in the world: this is the case for Sudan (after years of accumulating debt and arrears, its public debt exceeds 250% of GDP) or Eritrea (around 150% of GDP) – well above the sustainability threshold of 60%. Other countries have come close to or exceeded 100% of GDP in recent years, such as Mozambique (~100% of GDP), the Republic of Congo (~100%), or Cabo Verde and São Tomé and Príncipe (small island economies with high debt). Larger economies have also seen their debt levels explode: for example, Ghana exceeded 80-90% of GDP in 2022 before restructuring its debt, Zambia exceeded 100% of GDP at the time of its default in 2020, and Angola approached 120% of GDP around 2016-2017 following the collapse in oil prices (although the ratio has since declined thanks to debt relief measures and the oil recovery).

In absolute terms, the largest debts are logically concentrated in the continent’s largest economies. Egypt is one of the most indebted African countries in volume: its external debt is close to $100 billion ($103.7 billion according to a recent estimate), reflecting megaprojects financed on credit – which has contributed to high inflation and the devaluation of the Egyptian pound. South Africa and Nigeria also have high debt stocks (tens of billions of dollars each), although their debt ratios remain more moderate (around 60-70% of GDP for South Africa, and less than 40% of GDP for Nigeria thanks to a broader GDP base). Other highly indebted countries include Morocco (~$45.7 billion in external debt, or ~70% of GDP), Tunisia (~$27 billion, ~80% of GDP), Ethiopia (whose debt is close to 70% of GDP, with significant Chinese borrowing for its infrastructure), and Kenya (~67% of GDP, with several Eurobonds maturing in the coming years).

The economic implications of this massive debt are multiple. First, a budgetary crowding-out effect: debt servicing is mobilizing a growing share of public budgets, thereby reducing the room for maneuver to finance essential services. Even before the pandemic, more than 30 African countries were devoting more resources to debt servicing than to health spending. Between 2010 and 2022, the number of African countries where debt interest absorbs more than 10% of fiscal revenues increased from 9 to more than 20. In some extreme cases, governments spend more on repaying creditors than on education or productive investments, undermining long-term growth. Every dollar paid in interest is a dollar less for hospitals, schools, or infrastructure, worsening social deficits.

Second, high debt exposes countries to financial and currency crises. When debt becomes unsustainable, loss of investor confidence can lead to capital flight, a falling currency, and runaway inflation. Ghana, for example, saw its currency (the cedi) depreciate and inflation exceed 50% in 2022 when its fiscal situation became untenable, forcing the country to seek an IMF bailout. Similarly, countries such as Egypt and Kenya have suffered devaluations and price increases due to debt pressure and tightening international financing conditions. In the extreme, several states have had to default (temporarily stop paying their instalments) – as in Zambia in 2020, Ghana in 2022, and Mozambique in 2016 – with severe consequences: exclusion from financial markets, downgraded credit ratings, and the need for difficult negotiations with creditors. Even without formal default, the risk of insolvency can hamper private investment and growth as economic uncertainty increases.

Furthermore, dependence on certain creditors can have geopolitical implications. For example, the large share of debt owed to China is a matter of debate: while this financing has helped meet infrastructure needs, it can also tie debtor countries to China (which sometimes negotiates guarantees on natural resources or strategic assets in exchange for loans). Similarly, the intervention of the IMF and the World Bank, which is essential in times of crisis, is often accompanied by conditions (structural adjustment programs, tax reforms, reduction of subsidies, etc.) that have an internal social and political impact.

Finally, the very structure of private debt – particularly Eurobonds – makes Africa vulnerable to the global financial situation. The recent increase in interest rates by the central banks of developed countries has increased the cost of refinancing African debt. Several countries must refinance or repay bonds maturing in 2024-2025 in a context of high rates and risk aversion, which increases the likelihood of restructurings. There is sometimes talk of a new debt crisis in Africa, reminiscent of that of the 1980s, if no coordinated solution is found.

African debt is the result of legitimate financing needs (development, infrastructure, resilience to shocks) but today poses a major sustainability challenge. The diversification of creditors (China, private financial markets) has increased access to funds while complicating debt management. Current trends show an awareness of the problem: international initiatives for suspension or restructuring, calls to reform the global financial architecture, and efforts by African countries to control their deficits. A lasting solution to Africa’s debt problem will require increased multilateral cooperation – involving public and private creditors – as well as prudent borrowing and investment policies to avoid falling back into an unsustainable debt spiral.

Sources: Reports by the African Development Bank, the UN (UNCTAD), the IMF and the World Bank, data compilations (ONE Campaign, Trading Economics), analytical articles (Jeune Afrique, El Watan, Chatham House). The figures cited come in particular from the World Bank and AfDB statistics, updated 2023-2024.