Africa’s Public Debt Rises by 170% Amid Mounting Sustainability Concerns
Africa’s debt sustainability has become a growing source of concern as the continent’s public debt levels ballooned by 170% between 2010 and 2024, according to Bridgewater Advisors in its latest Africa Economic Outlook.
The advisory firm attributes the surge to a combination of external shocks, including the global financial crises, the Covid-19 pandemic, and heightened geopolitical tensions. In stark contrast, global public debt over the same period increased by a comparatively modest 54%.
The firm notes that the situation has been exacerbated by recent currency depreciations across the continent, which have substantially inflated external debt servicing costs.
“Africa continues to face structural challenges in managing debt. Exchange rate volatility, combined with limited access to affordable global financing, is significantly undermining debt sustainability,” the report stated.
Bridgewater Advisors also pointed to what it described as a “fragile international financial architecture,” which it argues is ill-equipped to provide the scale of concessional liquidity required to bridge Africa’s widening developmental financing gap.
In response to these challenges, African leaders have endorsed the establishment of the African Financial Stability Mechanism (AFSM), a $20 billion stabilisation fund to be hosted by the African Development Bank (AfDB).
The facility is designed to support member states with concessional financing in exchange for commitments to sound macroeconomic and fiscal reforms.
By 2035, the AFSM is expected to save African economies approximately $20 billion in debt servicing obligations.
However, the advisory firm cautions that while the AFSM represents an important step forward, it is not a panacea.
“Achieving lasting debt sustainability will require coordinated action across the continent, anchored in robust macroeconomic management, strengthened fiscal discipline, and improved domestic revenue mobilization,” said Prosper Melomey, Partner, Corporate Transactions & Investment Bank, Africa.
Ghana’s Debt Rises by $6bn in 2024
In West Africa, fiscal indicators remained relatively stable, with the region recording an external debt-to-GDP ratio of 31%, despite a 5% uptick in external borrowing.
Ghana and Nigeria, however, accounted for the most significant nominal debt increases in 2024, with Ghana’s debt stock rising by $6 billion and Nigeria’s by $2.5 billion.
Notably, Nigeria made up 48% of the region’s total external debt burden.
Looking ahead, Bridgewater Advisors projects Africa’s external debt to remain elevated through 2025 and 2026, with Southern Africa expected to bear the heaviest debt load. The region’s external debt-to-GDP ratio is projected to rise from 30% to 31%, driven largely by South Africa’s fiscal constraints and Zambia’s ongoing debt restructuring efforts.
In contrast, East, North, and West Africa are expected to maintain more stable debt levels around 22%, while Central Africa is projected to have the lowest external debt at just 3%.
Despite some regional variances, the outlook underscores the persistent risk of debt distress for many African countries, particularly those with high borrowing needs and weak macroeconomic buffers.
