• Just six African countries account for 50% of the continent’s external debt in 2025

• Public debt burdens remain high, with over 60% of African nations above the 50% debt-to-GDP threshold

• Afreximbank urges tighter fiscal policies and stronger domestic resource mobilization

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.