African countries’ debt rises to 990 billion euros

According to the UN Economic Commission for Africa, African countries’ sovereign debt has exceeded $1.1 billion (€990 billion), with debt servicing costing $163 billion annually.

“Public debt in Africa exceeds $1 billion, creating a serious fiscal crisis, with more than one in three countries either over-indebted or at high risk of becoming over-indebted,” Lousa told the UN Economic Commission for Africa (UNECA).

The issue of public debt and its impact on the ability of African countries to finance investment to promote economic development was one of the main topics of recent speeches by UNECA Executive Secretary Claver Gatete, who stressed the importance of reforming the financial system, which worldwide prefers concessional loans, that is, with lower interest rates and longer repayment periods than commercial loans.

“Reform of the global financial system is urgent as it can ease the difficulties in accessing critical financial resources needed to implement measures to achieve the Sustainable Development Goals (SDGs),” Claver Gatete said in his recent speech at the High Level Political Forum in Addis Ababa.

Between 2010 and 2023, Africa’s debt almost tripled, increasing by 192% to $1.1 trillion, with the annual cost of servicing the debt rising to $163 billion, or more than €146 million.

This is “the highest figure ever recorded, meaning that countries have very little room to pay off their debts while implementing the SDGs and the African Union’s 10-year programme,” Gatete added.

In advocating for sovereign debt restructuring in struggling countries, the UNECA argues that issuing green, blue or sustainable debt securities – that is, those linked to environmental, marine and development issues – could attract more investors who do not charge such high interest rates on loans.

The increase in public debt to GDP ratios since the Covid-19 pandemic, which has worsened an already existing trend, has left many African countries in serious financial difficulties and forced some to negotiate with creditors on public debt restructuring in an open way, including Zambia in 2021.

At a recent meeting, the UN Secretary-General’s Special Adviser on Africa, Cristina Duarte, also stressed that SDG implementation is inadequate to meet needs: only 12% of the 140 goals have been achieved.

“We need to understand the root causes of the financial challenges facing the continent and focus on sustainable financing and institutional strengthening in Africa to build resilience,” he said during a joint meeting of the African Union and UNECA.

African countries’ push for reform of the global financial architecture, such as channelling special drawing rights to multilateral development banks, will be formally presented at the Future Summit, which will be held on the sidelines of the UN General Assembly in New York in September.