• African domestic debt issuance rose from $150 billion in 2010 to nearly $500 billion in 2024.

• Governments now raise over half of their financing on local markets instead of abroad.

• Rising local borrowing costs and refinancing pressures heighten fiscal risks.

The value of debt issued by African countries on domestic markets increased from $150 billion in 2010 to nearly $500 billion in 2024, according to a report published on October 7 by six economists from the University of Toronto (Canada), the Kiel Institute for the World Economy (Germany), the Geneva Graduate Institute (Switzerland), the Aix-Marseille School of Economics (France), and the UN Economic Commission for Africa (ECA).

Titled “Africa’s Domestic Debt Boom: Evidence from the African Debt Database,” the report draws on a database covering more than 50,000 loans, Treasury bills, and bonds issued by 54 African countries between 2000 and 2024. Compiled from tens of thousands of official documents published by local authorities (central banks, finance ministries, debt management offices, stock exchanges) and international institutions (OECD, IMF, World Bank, among others), the database provides a detailed view of the continent’s domestic and external debt, including currencies, maturities, interest rates, creditor types, and issuance conditions.

Domestic debt refers to government-issued bonds and Treasury bills sold on local markets, while external debt covers obligations denominated in foreign currencies and loans contracted from foreign institutions. Grants and loans from regional organizations were excluded.

The report finds that Africa’s public debt landscape has undergone a major transformation over the past 25 years. The continent’s total public debt has more than quadrupled since the early 2000s, reaching $2 trillion in 2024. However, beyond the overall growth, the structure of that debt has changed significantly. While the story of Africa’s public debt has often focused on eurobonds, Chinese loans, and financing from multilateral institutions, the real transformation has taken place in domestic debt markets.

On average, African governments now raise more than half of their financing on local markets, reversing decades of reliance on external creditors.

On average, African governments now raise more than half of their financing on local markets, reversing decades of reliance on external creditors.

Initially driven by short-term debt instruments—particularly Treasury bills with maturities under one year—since 2022 about half of all newly issued domestic securities have maturities exceeding one year. Although multilateral loans continue to grow, their scale remains modest, as do flows from Paris Club members and other bilateral lenders. The sharp drop in Chinese lending after 2021, partly in response to Ghana and Zambia’s defaults, further shifted borrowing toward domestic markets.

A costly and risky option

Regarding borrowing costs, the data show that multilateral loans remain the least expensive source of financing, with interest rates consistently below 2% and, for many concessional borrowers, under 1%. Bilateral and Chinese loans carry slightly higher rates, while international bonds are issued at market rates and exhibit much higher volatility. Domestic bonds and Treasury bills, however, are the most expensive sources of financing on a nominal basis, with average interest rates ranging from 10% to 13%.

Domestic bonds and Treasury bills, however, are the most expensive sources of financing on a nominal basis, with average interest rates ranging from 10% to 13%.

The maturity structure of Africa’s domestic debt is also highly uneven. At one end of the spectrum, South Africa and Egypt issue long-term domestic bonds of 10 to 15 years. At the other, countries such as Ghana and Mozambique remain trapped in cycles of short-term domestic bond borrowing. Meanwhile, nations like Tanzania, Uganda, and Mauritius are gradually lengthening maturities, supported by stronger macroeconomic stability and institutional reforms.

The report highlights that the expansion of domestic debt issuance in African countries can help deepen financial systems, develop local investor bases, and strengthen monetary autonomy. Governments that borrow in their own currency face less exchange rate risk and have greater control over fiscal policy.

However, the rise in domestic borrowing brings several risks. Heavy reliance on domestic markets can reduce the availability of credit to the private sector and raise borrowing costs through a crowding-out effect. It also increases the exposure of local financial institutions to sovereign risk. National banks and pension funds, which now hold a large share of government debt securities, are becoming more entangled in fiscal dynamics that require close monitoring, the report warns.

Heavy reliance on domestic markets can reduce the availability of credit to the private sector and raise borrowing costs through a crowding-out effect.

The surge in domestic debt also exposes countries to high refinancing risks. The continent’s total public debt service is projected to exceed $100 billion in 2026 and remain above $60 billion per year through 2030. Most of these payments are tied to bonds—both domestic and international—that carry higher costs and shorter maturities than concessional loans.

Countries heavily exposed to eurobonds face particularly high repayment pressures. Even those that have avoided default allocate between 20% and 40% of their tax revenue to debt service. As access to international markets tightens, many governments are turning to domestic issuance to refinance maturing debts. This creates a self-reinforcing cycle in which short-term bonds are financed by even shorter-term instruments.

This dynamic highlights growing vulnerability. Without deeper domestic markets or renewed access to concessional financing, refinancing pressures could quickly turn into liquidity crises, especially if a significant share of domestically issued debt is held by foreign investors.

Walid Kéfi