Nigeria ranks third Africa’s top 10 external debtors – Afreximbank

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Afreximbank’s latest report titled ‘African Debt Outlook: A Ray of Optimism,’ said the continent’s external debt levels remain elevated, primarily due to the limited development of domestic financial markets and high interest rates.

The bank further highlighted the challenges and opportunities facing African nations in managing their debt.

“In the first half of 2024, ten African nations constituted 69 percent of the continent’s total external debt stock, up from 67 percent in 2023,” the report reads.

The countries leading this metric are South Africa (14 percent), Egypt (13 percent), Nigeria (8 percent), Morocco (6 percent), Mozambique (6 percent), Angola (5 percent), Kenya (4 percent), Ghana (4 percent), Côte d’Ivoire (3 percent), and Senegal (3 percent).

“The growing demand for foreign exchange to finance imports has further exacerbated external indebtedness, fuelled by reliance on aid, concessional loans from multilateral institutions, and competitive rates offered by private creditors.

Since 2008, the external debt of African countries has escalated significantly, reaching ap- proximately US$ 1.16 trillion and representing 60 percent of the region’s total public debt stock as of 2023. Projections indicate a slight increase to US$ 1.17 trillion in 2024, with sustained growth anticipated, potentially reaching US$ 1.29 trillion by 2028.

This trend is driven by the continent’s increasing financing requirements, largely due to population growth pressures.” Afreximbank said that most of Africa’s debt is long-term, which accounts for 75 percent, while short-term debt accounts for 15.9 percent.

“The continent’s increasing need for financing, especially infrastructure development, re- quires long-term debt. Between 2008 and 2023, long-term debt increased compared to short-term debt,” the bank said.

In 2023, long-term debt accounted for 75.0 percent of the continent’s total debt, while short-term and IMF debt comprised 15.9 percent and 8.9 percent, respectively. Projections show that from 2024 to 2028, long-term debt will remain the dominant form of debt, making up 75.7 percent, 75.9 percent, 76.2 percent, 76.4 percent, and 76.4 percent of the total debt, respectively.”