Nigeria, Two Others Dominate Africa’s Exterior Debt Inventory

A current report launched by the African Export-Import Financial institution (afreximbank) says three international locations, South Africa, Egypt, and Nigeria, are answerable for one-third of Africa’s exterior debt inventory.

The report titled, ‘State of Debt Play in Africa and the Caribbean’, presents a comparative and forward-looking evaluation of debt dynamics throughout Africa and the CARICOM area, utilizing a debt sustainability evaluation (DSA) framework to look at rising vulnerabilities, fiscal constraints and macroeconomic trajectories.

The report reveals that South Africa accounts for 13.1 per cent of Africa’s exterior debt inventory, intently adopted by Egypt with 12 per cent simply as Nigeria holds 8.4 per cent.

It notes that different substantial debtors embody Morocco, which accounts for five.9 per cent, Mozambique, with 5.4 per cent, Sudan, with 5.2 per cent, and Kenya, with 4.1 per cent.

The report reveals that over 30 per cent of the continent’s overseas debt is distributed amongst smaller economies categorised as “others”. It mentioned this debt focus amplifies systemic dangers.

“Fiscal misery in any of those international locations may set off wider regional repercussions via investor sentiment, commerce interlinkages, and cross-border monetary channels,” the report warns.

It provides that in Africa, the debt panorama has entered a interval of cautious stabilisation following the extreme fiscal and financial dislocations induced by the COVID-19 pandemic and world financial tightening.

“However, systemic vulnerabilities proceed to pose important challenges. With personal collectors accounting for a rising share of debt, exceeding 40 per cent in some economies, there’s elevated publicity to market dynamics and refinancing pressures,” it states.

Nigeria has been battling an enormous debt burden, which hit N144.6 trillion in December, with exterior debt accounting for N62.917 trillion.

Within the 12 months, debt service gulped N13.12 trillion, a 68 per cent enhance from N7.8 trillion in 2023.

Although the rising debt and debt service prices may very well be attributed to the depreciation of the naira which misplaced 69 per cent of its worth towards the greenback between June 2023 and March 2025, the affect of the heavy debt servicing prices on the economic system is important.

It gulped a major a part of the income and restricted the nation’s capability to spend on vital social companies like training, well being and social infrastructure.

The report says concurrently, debt service obligations stay disproportionately excessive, particularly in international locations with slender export bases and pro-cyclical income streams, rendering fiscal planning precarious.

“Africa’s path to sustainability is dependent upon structural reforms to increase fiscal house, cut back exterior dependence, and increase home useful resource mobilisation. Accordingly, a transparent shift from extractive, commodity-led development to diversified, productivity-driven economies can’t be overstated.

“Between 2023 to 2025, Africa’s debt outlook has modestly deteriorated. Revised projections from April 2024 elevated anticipated debt-to-GDP ratios by 0.5 per cent in 2024 and by an extra 0.8 per cent in 2025 in comparison with the October 2023 projections.

“These upward revisions sign deteriorating near-term fiscal pressures, pushed by underwhelming income efficiency, persistent expenditure pressures – together with important subsidies and public sector wage commitments and fragile post-pandemic restoration spending,” it states.

It says the depreciation of native currencies has elevated the home price of servicing foreign-denominated debt, significantly in international locations with restricted overseas trade buffers.

These components, it says, collectively underscore constrained fiscal house and stalled consolidation momentum.

Nonetheless, in contrast, the report says the medium-term (2026-2029) outlook displays cautious optimism.

Forecasts for these years in line with the report, have been revised downward relative to earlier estimates, with debt ratios anticipated to say no by 0.4 per cent in 2027, 0.6 factors in 2028, and one level by 2029.

“These changes recommend anticipated reforms in public monetary administration, improved debt transparency, revenue-enhancing measures, and resumption of growth-supportive fiscal and financial frameworks,” it says.

It, nonetheless, notes that these projections hinge critically on coverage execution, governance continuity, and steady exterior financing situations.