By Joy Baba-Yesufu
Africa’s external debt is projected to surpass $1.3 trillion by 2025, continuing a slow upward trend through 2029, according to the latest Afreximbank half-year report. While the pace of debt accumulation has moderated since the sharp rise between 2016 and 2022, the continent’s debt profile remains fragile.
South Africa (13.1%), Egypt (12.0%), and Nigeria (8.4%) account for over one-third of Africa’s external debt stock. Other major debt holders include Morocco, Mozambique, Sudan, and Kenya, while over 30% is distributed across smaller economies. This concentration raises systemic risks, where fiscal shocks in larger economies could ripple across the region.
Despite rising debt levels, Africa’s debt-to-GDP ratio is projected to decline by 2028, supported by stronger economic growth and adoption of longer-tenure debt instruments. Central government debt is expected to stabilise at just above 55% of GDP by 2029, down from nearly 63% in 2020.
However, risks persist. By 2025, 14 African countries are expected to exceed the 180% debt-to-exports threshold, and 25 countries will surpass the 20% debt service-to-revenue ratio, signaling deep external vulnerabilities. Additionally, 26 nations are forecasted to fall below the IMF’s recommended three-month foreign reserves benchmark.
While debt servicing pressure is expected to ease slightly from 2025, thanks to reduced commercial borrowing, falling global interest rates, and inflation control, interest-to-GDP ratios will remain high, especially in fiscally fragile countries like Ghana and Nigeria.
The report underscores the need for sound debt management, fiscal reforms, and stronger coordination with international partners. Countries that curb public spending, boost domestic revenue, and restructure debt are likely to weather future shocks and secure long-term debt sustainability.
