• African multilateral lenders introduce tool to detect early signs of debt stress

• Initiative follows disputes over Ghana and Zambia debt restructurings

• Concerns grow over rising debt risks across African countries

The Alliance of African Multilateral Financial Institutions (AAMFI) has launched an early warning system designed to detect the first signs of sovereign debt distress across the continent and help prevent future disputes linked to debt restructuring.

The announcement was made on January 29, by Samaila Zubairu, chairman of the alliance, also known as the “Africa Club.” AAMFI brings together seven regional multilateral institutions: Africa Finance Corporation (AFC), African Export-Import Bank (Afreximbank), the Trade and Development Bank (TDB), African Reinsurance Corporation (Africa Re), African Trade & Investment Development Insurance (ATIDI), Shelter Afrique Development Bank (SHAFDB), and the PTA Reinsurance Company (ZEP-RE).

“We have developed an early warning or debt distress signal detection system that allows us to provide collective support to countries in difficulty and to design instruments that can help ease stressed situations,” Zubairu, who is also chief executive officer of Africa Finance Corporation, said in comments reported by Bloomberg.

The initiative follows controversies involving regional multilateral financial institutions, sovereign borrowers, and credit rating agencies during the debt restructuring processes of Ghana and Zambia. On January 23, Afreximbank announced it was cutting ties with Fitch Ratings, arguing that the agency’s assessment no longer reflected a proper understanding of the bank’s operations, pan-African mandate, and founding agreement.

Five days later, Fitch Ratings downgraded Afreximbank’s credit rating to BB+ from BBB-, placing it in speculative-grade territory. The agency cited a higher risk profile following an agreement under which Afreximbank accepted losses on a $750 million loan to Ghana as part of the country’s broader debt restructuring.

Debate over prefeprred creditor status

Ghana and Zambia requested debt restructuring under the G20 Common Framework, a mechanism created after the Covid-19 pandemic to provide coordinated debt treatments for low-income countries involving a broad range of creditors. During the restructuring processes, the International Monetary Fund, the World Bank, and the African Development Bank were shielded from losses, as they are considered multilateral institutions providing concessional financing.

Ghana and Zambia argued, however, that two AAMFI members, Afreximbank and TDB, should provide debt relief comparable to that offered by official bilateral creditors. In December 2025, Afreximbank agreed to incur losses on a loan to Ghana, ending a deadlock that threatened the country’s agreements with other creditors. Afreximbank also initiated arbitration proceedings against Zambia, seeking to defend its claimed “preferred creditor status.”

Preferred creditor status is a widely accepted principle under which multilateral development banks and development finance institutions are not required to participate in sovereign debt restructurings and are given priority in debt repayment. The IMF has previously stated that development banks cannot unilaterally declare themselves preferred creditors and that official creditors do not recognize this status for lenders with private shareholders, which applies to Afreximbank.

TDB has taken a more flexible approach by buying out stakes held by non-sovereign shareholders to meet the requirement of having no private shareholders. The bank is currently in talks with Zambia to restructure its debt exposure in the country.

The launch of the early warning system comes amid growing concern over the risk of a new debt crisis in Africa. A report published by Afreximbank in February 2025 identified nine countries as being in debt distress: Ghana, Malawi, Mozambique, the Republic of the Congo, São Tomé and Príncipe, Somalia, Sudan, Zambia, and Zimbabwe. Nineteen other countries, including Kenya, Cameroon, the Central African Republic, and Tunisia, were classified as facing a high risk of debt distress.

Walid Kéfi