With Africa’s total debt hitting $1.2 trillion, Afreximbank has said that governments on the continent must embrace fiscal discipline, noting that from 2027, citizens will begin to see a significant reduction in their nations’ debt profiles.
It also put global public debt at a staggering $102 trillion in 2024, marking a $5 trillion increase from 2023, with the fiscal policies of economic powerhouses like the United States, which constitutes 34.6 per cent of global debt and China primarily driving this surge.
In its report titled: “ African Debt Outlook: A Ray of Optimism”, the bank stated that while Africa’s public debt-to-GDP ratio remains relatively lower compared to other regions, the sustainability of its debt servicing has become a pressing concern.
Yet, amid these challenges, the continental bank stated that there was a glimmer of hope, with recent initiatives suggesting that Africa is making significant strides in stabilisng its debt profile, with a projected decline in debt levels expected by 2027-2028.
“This positive trajectory is fueled by favorable macroeconomic conditions, improved fiscal management, and enhanced access to capital markets,” it stated, questioning however, whether this can be sustained.
Afreximbank highlighted the importance of fiscal discipline, structured debt relief initiatives, and diversified economic investments as key pillars for achieving sustainable debt management.
Africa, it said, can navigate its post-crisis recovery phase by advocating reforms in international financial architecture, fostering greater transparency, and building a resilient economic future.
To secure this optimistic outlook, it said that a multifaceted policy response was essential, explaining that policymakers must prioritise effective expenditure management, revenue mobilisation, and active participation in initiatives like the G20 Common Framework.
“Agriculture, manufacturing, technology, and tourism investments will reduce reliance on volatile commodity markets while advocating for fair creditor- debtor treatment to ensure a more equitable global financial system.
“The path ahead is challenging, but with the right strategies, Africa’s rising debt could become a stepping stone to sustainable growth rather than a ticking time bomb,” the report added, noting that economic slowdowns often reduce foreign exchange earnings, making it challenging for these countries to meet their debt obligations and resulting in further borrowing.
Additionally, the high costs associated with infrastructure development, healthcare, and education in emerging markets, it said, necessitate extensive financing, often obtained through loans and other
debt instruments.
