In a report released on May 28, the African Export-Import Bank (Afreximbank) revealed that just six African countries hold half of the continent’s total external debt this year.
According to the study, titled “State of Play of Debt Burden in Africa and the Caribbean”, South Africa leads the list with 13.1% of Africa’s external debt, followed by Egypt with 12%, Nigeria with 8.4%, Morocco at 5.9%, Mozambique at 5.3%, and Sudan at 5.2%.
This high concentration of debt raises the risk of wider instability. A financial crisis in any one of these countries could easily spread across the region, affecting investor confidence, trade activity, and cross-border financial flows.
The report also shows that the average debt-to-GDP ratio across Africa remains high, even though it varies significantly from country to country. In over 60% of African nations, this ratio exceeds 50% in 2025. Some countries, including Ghana, Cape Verde, and Sudan, are facing debt levels above 100% of GDP.
Brighter Medium-Term Outlook
Despite current challenges, Afreximbank sees room for cautious optimism. Between 2026 and 2029, the average debt-to-GDP ratio across the continent is expected to fall by more than two percentage points, settling just above 55% by 2029. This would mark a significant drop from the 2020 peak of nearly 63%.
This projected improvement reflects more cautious budget planning and the gradual effect of debt restructuring processes, particularly under the G20’s Common Framework. Countries like Zambia, Ethiopia, and Ghana are already starting to benefit from this mechanism.
Still, risks remain high, especially for nations heavily exposed to eurobonds, variable-rate debt instruments, or refinancing challenges in the coming years. North and West African countries, which tapped into international debt markets aggressively during the 2010s, are likely to keep facing elevated external debt servicing costs.
Debt Service Pressures and Weak Reserves
Another key concern is the strain of debt payments on public finances. In 25 African countries, the debt service-to-public revenue ratio surpasses the 20% limit set by the International Monetary Fund (IMF) and the World Bank’s Debt Sustainability Framework.
A number of high-risk countries, including Mozambique, Ghana, and Zambia, have debt-to-revenue ratios above 50%. In Mozambique’s case, the figure exceeds 120%, meaning the government spends more on debt repayment than it earns in total revenue.
As a result, many countries are also seeing worrying declines in foreign reserves. In 2025, nearly half of all African nations, 26 countries in total, are expected to fall below the IMF’s minimum threshold of three months of import cover in foreign currencies and gold.
Only three African nations stand out for their relatively strong reserves. Mauritius is close to covering 17 months of imports, while Algeria and Libya have reserves that can support more than 12 months of imports.
Policy Recommendations and Global Reforms
The report warns that Africa’s future debt outlook will depend heavily on macroeconomic conditions, fiscal discipline, and global financial trends. To strengthen resilience, Afreximbank emphasizes the importance of better debt management, building budget reserves, and focusing on investments that deliver strong economic returns.
Priority should also be given to raising more public funds domestically. This would help reduce dependence on commercial creditors. The report further calls for deeper partnerships with concessional lenders and more aggressive advocacy for global financial reforms to ensure fairer access to concessional financing and debt relief programs.
• Maritime sector faces renewed risks amid military tensions in the Middle East• Blockade fears at S...
Egypt signs deals to import up to 290 LNG cargoes over 30 months, starting in July Trafigura,...
(AfDB)-Egypt's first integrated solar and battery storage plant will deliver dispatchable clean ener...
Lion Group to explore and exploit gold, copper, and manganese in Algeria Malaysian firm plans...
This launch is a significant milestone that highlights Rwanda's ongoing digital transformation. With...
Key Highlights Niger’s government has seized full control of SOMAÏR, its only active uranium mine, stripping Orano of its 63.4% stake. Officials...
Key Highlights • Somalia inaugurates its first stock exchange, the National Securities Exchange of Somalia (NSES), in Mogadishu. • NSES will start...
Key Highlights: • Olam Agri to onboard 5,000 small-scale farmers in Kwara State under a new soybean supply initiative. • Partnership with IDH and...
Key Highlights• Ivory Coast ends TSDAR, a petroleum tax introduced in 2018 to reduce SIR’s debt.• Government to redirect two-thirds of revenue to...
Tucked away in northeastern Chad, deep in the heart of the Sahara Desert, the Ennedi Massif stands as an extraordinary natural and cultural marvel. This...
Kakum National Park is a protected area located in Ghana’s Central Region, near the city of Cape Coast. Established as a forest reserve in 1931 and...