Four African countries are teetering on the brink of default as mounting debt burdens, rising interest rates, and declining revenues strain national budgets.
- African countries are expected to spend approximately $74 billion on debt servicing as of 2024
- AFRODAD named the affected countries and called for a UN-led mechanism to assist distressed countries
- Zambia, Ghana, Ethiopia, and Chad are teetering on the brink of default due to mounting debt burdens
The affected African countries are struggling to meet their debt obligations, leading to concerns about potential defaults and economic instability.
The African Forum and Network on Debt and Development (AFRODAD), a lobby group advocating for debt cancellation and addressing loan-related issues in Africa, named the affected countries as Zambia, Ghana, Ethiopia, and Chad.
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AFRODAD Executive Director Jason Braganza called for an overhaul of the global financial system to pave the way for a United Nations-led mechanism of assisting distressed countries.
He further emphasized the urgency of reforming global debt mechanisms, particularly for African nations facing severe debt distress.
Debt-stricken African nations: A snapshot
Zambia
It became the first African country to default during the COVID-19 pandemic, failing to meet a $42.5 million Eurobond payment in 2020.
Despite negotiations with creditors, Zambia has struggled with restructuring under the G20 Common Framework, with delays caused by disagreements between Western bondholders and China, one of its largest creditors
Ghana
In December 2022, Ghana announced it would default on most of its external debt, totaling around $28.4 billion.
This move was part of an effort to restructure its debt burden amid a severe economic crisis driven by high inflation and a depreciating currency. The country has since engaged in an IMF-backed debt restructuring plan
Ethiopia
The country applied for debt relief under the G20 Common Framework in 2021, but progress was delayed due to its civil war.
Ethiopia has struggled with rising inflation, a devalued currency, and fiscal pressures from its post-war reconstruction efforts
Chad
It was the first country to reach a debt restructuring agreement under the Common Framework in November 2022.
However, its economic challenges persist due to its dependence on oil exports, which are vulnerable to price fluctuations, and a fragile domestic financial system
Africa’s growing debt burden
African nations are employing various strategies to manage their mounting debt burdens, but challenges remain as debt service costs continue to rise.
As of 2024, African countries are expected to spend approximately $74 billion on debt servicing, with a significant portion owed to private creditors.
The African Development Bank (AfDB) has warned that from 2025 to 2033, the continent will require at least $10 billion annually for debt refinancing.
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This growing debt burden limits investment in crucial sectors such as infrastructure, education, and healthcare, constraining economic growth.
Analysts warn that unsustainable debt levels, exacerbated by global economic challenges and currency depreciation, could push African nations into financial crises.
As a result, calls for debt restructuring and relief have intensified to prevent further economic deterioration.
