Urgent Call: Africa’s Debt Servicing Needs $74bn This Year – AfDB

Urgent Call: Africa’s Debt Servicing Needs $74bn This Year – AfDB

Nigeria and other African nations are in urgent need of approximately $74 billion to cover debt servicing costs in 2024, according to Prof. Kevin Urama, Vice President and Chief Economist at the African Development Bank (AfDB). This figure excludes hidden debt and contingent liabilities,…Urgent Call: Africa’s Debt Servicing Needs $74bn This Year – AfDB

which could significantly increase the actual amount needed. The AfDB economist made these comments at the launch of the Debt Management Forum for Africa and the inaugural policy dialogue in Abuja.

Urama revealed that, in addition to the growing debt burden, African countries face rising refinancing needs, with around $10 billion required annually between 2025 and 2033. He also pointed out the sharp increase in African Eurobond yields, which have doubled since 2019, further complicating the region’s ability to refinance its debt.

The AfDB chief highlighted that public debt in Africa has surged by 170% since 2010, driven by global financial challenges and domestic economic instability. He warned that many middle-income African nations risk remaining stuck in economic stagnation for decades, with some needing more than a century to achieve high-income status. Sub-Saharan Africa is expected to experience fragile growth of 3% in 2024, up from 2.4% the previous year. Urama stressed that the creation of the Debt Management Forum for Africa (DeMFA) is vital in addressing these challenges and ensuring that the continent can build the resilience needed for sustainable development.

The forum’s role is crucial, especially as African countries increasingly rely on private creditors. By the end of 2023, nearly half of Africa’s debt was privately owned, a figure that is projected to rise to 54% by 2024. The cost of borrowing from international markets is significantly higher than from multilateral development banks, further straining African economies.

Urama also emphasized the need for Africa to address financial outflows, which amount to over $1.6 billion daily, exacerbating the region’s debt crisis. This amounts to more than three times the total external financial inflows to Africa each year.

The launch of the DeMFA comes at a time when African nations face a constrained fiscal space, driven by growing debt and limited access to funding. The forum aims to enhance Africa’s capacity in debt management, with a focus on innovative strategies to manage debt sustainably.

As the African continent grapples with these challenges, experts urge the region to reduce capital outflows, improve resource mobilization, and adopt long-term development financing solutions to ensure its economic growth and stability.

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