By Alex Ababio
Africa’s growing debt burden is once again under sharp scrutiny after the African Development Bank (AfDB) warned that elevated debt pressures continue to threaten economic stability across the continent despite signs of gradual recovery in growth.
The warning, contained in the latest African Economic Outlook released during the AfDB Annual Meetings in Brazzaville, Congo, comes at a time when many African governments are struggling with rising debt-servicing costs, shrinking fiscal space, high inflation, and reduced access to affordable financing.
The report paints a troubling picture of a continent rich in natural resources but constrained by mounting financial obligations.
Africa, which holds more than 60 percent of the world’s precious mineral reserves and connects a market of over 1.3 billion people under the African Continental Free Trade Area (AfCFTA), has seen its public debt stock rise sharply in recent years. According to the AfDB, Africa’s total public debt reached approximately $1.9 trillion in 2024, up from $1.6 trillion in 2020. The increase was driven largely by heavy public spending during and after the COVID-19 pandemic, rising infrastructure demands, currency depreciation, and the global economic shocks caused by geopolitical tensions and supply chain disruptions.
Although the AfDB Outlook noted that the continent’s debt-to-GDP ratio declined from 63.9 percent in 2023-2024 to 62 percent in 2025 and is projected to ease further to 61.4 percent in 2026, the Bank warned that the improvement does not eliminate the underlying risks.
“The declining debt-to-GDP ratio reflects a rebound in economic growth and fiscal consolidation undertaken in several countries,” the report stated. However, it stressed that vulnerabilities remain because of the changing structure of Africa’s debt portfolio, especially the increasing dependence on expensive commercial borrowing instead of concessional loans.
The AfDB said this structural shift has significantly increased debt servicing costs across the continent, leaving governments with less money to invest in healthcare, education, infrastructure, agriculture, and social protection programmes.
One of the most alarming findings in the report is the growing share of government revenue being used to service external debt. According to the Outlook, the proportion increased from 23.7 percent in 2017 to 31 percent in 2024. In some countries, interest payments now consume more than a quarter of government revenues.
The debt situation is particularly worrying because many African economies are still recovering from multiple shocks, including the COVID-19 pandemic, climate-related disasters, Russia’s invasion of Ukraine, and rising global interest rates.
Reuters reported that AfDB Chief Economist and Vice President Prof. Kevin Chika Urama warned that Africa’s growth risks were already tilted to the downside even before the latest tensions in the Middle East involving Iran. According to him, higher fuel, food, and fertilizer prices triggered by geopolitical instability could reduce Africa’s economic growth by up to 1.5 percent if global conflicts persist for several months.
The AfDB projects Africa’s economy to grow by 4.2 percent in 2026 after expanding by 4.4 percent in 2025. While this places Africa among the world’s fastest-growing regions, the Bank cautioned that growth remains fragile because many countries continue to face debt refinancing risks, currency pressures, and limited fiscal buffers.
Analysts say the debt crisis is increasingly becoming a development crisis.
Dr. Hippolyte Fofack, former Chief Economist of the African Export-Import Bank (Afreximbank), has repeatedly argued in public policy discussions that rising debt servicing obligations are crowding out productive investment and worsening inequality across Africa. According to him, African countries are paying higher borrowing costs partly because of global financial market perceptions that often classify African economies as high-risk regardless of their individual fundamentals.
This concern is echoed in the AfDB’s latest report, which highlights the role of unfair sovereign credit ratings and fragmented global financing systems in increasing Africa’s borrowing costs. The report notes that only a few African countries enjoy investment-grade ratings, making access to affordable international capital difficult.
S&P Global Ratings recently warned that African countries face a “debt wall” in 2026, with external debt repayments expected to exceed $90 billion. Egypt alone is projected to account for about $27 billion of the repayments, while Angola, South Africa, and Nigeria also face significant refinancing obligations.
The rating agency stated that while some African governments have made progress through fiscal reforms and debt restructuring efforts, debt levels remain elevated and revenue generation remains weak in many economies.
In Ghana, Zambia, Ethiopia, and several other countries, debt restructuring negotiations under the G20 Common Framework have exposed the complexities of modern sovereign debt management, especially with the growing role of private creditors and non-Paris Club lenders.
Economists say the composition of Africa’s debt has changed dramatically over the past decade. Traditional concessional financing from multilateral institutions has declined, while borrowing from commercial markets, Eurobonds, and domestic markets has increased. The AfDB said Africa’s debt structure has shifted toward external commercial creditors, domestic borrowing, and non-traditional lenders, making debt more expensive and vulnerable to global financial shocks.
Despite the growing risks, African leaders and financial institutions insist the continent still possesses enormous untapped financial potential.
According to the AfDB’s 2025 and 2026 African Economic Outlook reports, Africa could mobilize an additional $1.43 trillion annually through stronger tax collection, better public investment efficiency, reduced illicit financial flows, deeper capital markets, and improved use of natural resources.
The Bank estimates that Africa loses hundreds of billions of dollars annually through capital flight, corruption, tax leakages, and illicit financial flows. Compared to financial inflows of about $190.7 billion received in 2022, the continent lost approximately $587 billion through leakages, according to the report.
Speaking during the launch of the African Economic Outlook, Prof. Kevin Chika Urama said Africa must increasingly look inward to finance its own development.
“Africa must now face the challenge and look inwards to mobilizing the resources needed to finance its own development in the years ahead,” he stated.
The AfDB is promoting what it calls the New African Financial Architecture for Development (NAFAD), an initiative designed to unlock more than $4 trillion held in African pension funds, sovereign wealth funds, insurance assets, and institutional investments.
AfDB President Sidi Ould Tah has argued that Africa’s problem is not necessarily the absence of capital but rather the inability to effectively mobilize and deploy available resources at scale. Reuters reported that the continent faces an annual financing gap of more than $400 billion for critical sectors such as infrastructure, energy, food security, climate resilience, and job creation.
However, experts warn that domestic resource mobilization alone may not immediately solve Africa’s debt challenges.
Dr. Razia Khan, Chief Economist for Africa and the Middle East at Standard Chartered, has previously argued in international financial forums that African economies require a combination of fiscal reforms, export diversification, industrialization, and improved governance to sustainably reduce debt vulnerabilities.
The AfDB report also warns that persistently high oil and fertilizer prices, inflationary pressures, tighter global monetary policies, and domestic structural rigidities could worsen debt vulnerabilities across the continent. Rising inflation may force central banks to maintain high interest rates, further slowing investment and weakening household purchasing power.
For millions of Africans already struggling with unemployment, high food prices, and poor public services, the debt crisis is no longer just a financial issue discussed in boardrooms and economic forums. It is increasingly shaping everyday life.
As governments devote larger portions of national revenue to debt repayments, spending on hospitals, roads, schools, and social interventions continues to shrink. Development economists warn that unless African countries secure more sustainable financing and strengthen domestic economic resilience, the continent risks entering another prolonged cycle of debt distress similar to the structural adjustment era of the 1980s and 1990s.
For now, Africa’s debt outlook remains balanced between cautious optimism and deep uncertainty. While growth projections offer some hope, the continent’s economic future may ultimately depend on whether leaders can transform Africa’s vast natural wealth into sustainable development without sinking deeper into the burden of debt.