Government debt in Sub-Saharan Africa has doubled in the past decade, says the IMF, but the continent isn’t in a debt crisis yet
Abuja — Record commodity prices and low global interest rates have encouraged African countries to borrow like they did in the 1990s, but now some are struggling to pay up as their revenue slows along with economic growth.
African governments have raised about $26bn in international markets this year, from close to $30bn in 2018, as they took advantage of investors’ thirst for returns in a world awash with negative yields. Volatile currencies across the continent increase the risks of borrowing in hard currency and the rising cost of serving debt could crowd out other expenditure in a region that’s home to more than half the world’s poor.
Still, the continent is far from a debt crisis, its biggest multilateral lender says. “Some individual countries are getting to higher levels in terms of debt-to-GDP ratios, that’s the concern,” African Development Bank president Akinwumi Adesina said. The debt-to-GDP ratio of Africa is still “well within acceptable limits”. More reliance on commercial bonds has raised servicing costs, diverting funds that could be spent on new roads or schools.
External debt payments now eat up, on average, about 13% of the revenue of African governments from 4.7% in 2010, according to data compiled by the UK-based Jubilee Debt Campaign.
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