By Alex Ababio
A Continental Emergency: Leaks Undermining Growth and Fueling Debt
Africa hemorrhages a staggering $580 billion each year due to corruption and illicit capital flight, the African Development Bank (AfDB) has revealed. This bleeding of resources is eroding economic stability, hampering infrastructure development, and exacerbating a mounting debt crisis—an alarm sounded by AfDB President Akinwumi Adesina in a recent Bloomberg interview.
“It doesn’t matter how much water you pour into a bucket if the bucket is leaking. If you’re able to reduce the leakages to illicit capital, also corruption and all of these things, Africa will be able to keep a lot of these resources and meet the amount of infrastructure it needs,” Adesina emphasized.
Daily and Annual Losses: A Broken Bucket
Africa loses approximately $1.6 billion every day to various “financial leakages.”
$90 billion per year via illicit financial flows
$275 billion per year lost to profit shifting by multinational corporations
$148 billion per year siphoned off through corruption
Growing Debt, Shrinking Returns
The continent is concurrently facing an annual infrastructure financing gap of up to $170 billion, critical for fueling economic growth and job creation—especially for Africa’s youthful population.
Governments are increasingly squeezed by spiraling debt-service costs, reaching levels not seen since the early 2000s debt crisis.
Alarmingly, more than half of African governments now spend more on interest payments than on public healthcare, further weakening social resilience.
Ghana’s Debt Distress: IMF Warnings, Restructuring Deals, and Lingering Arrears
Ghana remains under high risk of debt distress, as flagged by the IMF in mid-2025, with its gross financing needs expected to stay elevated due to steep debt servicing obligations . A pivotal debt restructuring agreement with official creditors has reduced the debt service-to-revenue ratio to a projected below 18% from 2028 onwards, and aims to bring the debt-to-GDP ratio down to under 55% by 2028 . External public debt stood at 37.4% of nominal GDP in 2023, a slight improvement from 39.1% in 2022 . Meanwhile, Fitch Ratings upgraded Ghana’s outlook to “B-” with a stable bias in June 2025, citing normalized creditor relations and near-completion of external restructuring—including planned completion by end-2025 . However, Ghana’s challenge is compounded by lingering arrears—such as the $2.5 billion owed to independent power producers and gas suppliers, which the government intends to settle by the end of 2025—and deteriorating efficiency in revenue collection at the state utility, ECG, which has lost roughly 40% of revenue .
Nigeria’s Crisis in Focus & Vulnerable Debt Trends
According to AfDB’s 2025 African Economic Outlook, Nigeria is expected to allocate 75% of its revenue to interest payments in 2025, illustrating the severe pressure even in economies with relatively moderate debt-to-GDP ratios.
Although some African nations saw debt levels decline in 2022–2023—thanks to favorable interest-growth differentials—the AfDB warns that economic slowdowns or rising interest rates could swiftly reverse these gains. Reckless commercial borrowing further imperils progress.
Expanding the Lens: Institutional Solutions Signal Hope
The AfDB is advancing digital tax administration improvements, anti-corruption initiatives, and stronger governance frameworks to plug the financial leaks.
In February 2025, the AfDB partnered with INTERPOL to bolster anti-corruption efforts and combat financial crimes across the continent.
Meanwhile, broader proposals for reform are emerging: Angola—currently chairing the African Union—has led efforts to establish the African Financing Stability Mechanism (AFSM). Modeled on Europe’s ESM, the AFSM aims to cushion countries from liquidity shocks and alleviate debt service costs by an estimated $20 billion over the next decade. Its initial capital goal is $3 billion, growing to as much as $16 billion, with targeted Aa/AA credit ratings and partial non-African ownership.