Nigeria Ranks Third Among Africa’s Top 10 External Debtors – Afreximbank

The Africa Export and Import Bank (Afreximbank) has pinpointed Nigeria as one of ten nations across Africa that collectively make up 69 percent of the continent’s entire external debt.

In its most recent publication, African Debt Outlook: A Ray of Optimism, Afreximbank explained that the external debt levels in Africa continue to be elevated because of underdeveloped local financial systems and high interest rates.

“In the first half of 2024, ten African nations constituted 69 percent of the continent’s total external debt stock, up from 67 percent in 2023,” the report reads.

Per the report’s findings, South Africa tops the list with 14 percent of Africa’s total external debt, followed by Egypt (13 percent), Nigeria (8 percent), Morocco (6 percent), Mozambique (6 percent), Angola (5 percent), Kenya (4 percent), Ghana (4 percent), Côte d’Ivoire (3 percent), and Senegal (3 percent).

The bank linked the growing debt to a heightened need for foreign currency to pay for imports, dependence on aid and favorable loans from multilateral organizations, and attractive rates provided by private lenders.

“Since 2008, the external debt of African countries has escalated significantly, reaching approximately US$ 1.16 trillion and representing 60 percent of the region’s total public debt stock as of 2023,” Afreximbank stated.

“Projections indicate a slight increase to US$ 1.17 trillion in 2024, with sustained growth anticipated, potentially reaching US$ 1.29 trillion by 2028. This trend is driven by the continent’s increasing financing requirements, largely due to population growth pressures.”

Afreximbank highlighted that long-term debt continues to predominate, comprising 75 percent of Africa’s total debt, while short-term debt accounts for 15.9 percent.

“The continent’s increasing need for financing, especially infrastructure development, requires long-term debt. Between 2008 and 2023, long-term debt increased compared to short-term debt,” the report said.

Offering suggestions to address external debt, Afreximbank encouraged countries reliant on resources to focus on broadening their economic bases.

“For example, Nigeria should invest in agriculture and manufacturing, while Angola should develop its renewable energy sector,” the bank suggested.

The report also advocated for responsible borrowing habits, enhanced debt management frameworks, and more robust social safety nets to safeguard vulnerable groups during economic disruptions.

Despite ongoing difficulties, Afreximbank observed that Africa’s debt situation is showing hints of stabilization thanks to macroeconomic progress, reduced interest rates, and improved access to capital markets.

The bank recommended that governments work to shrink fiscal deficits, boost the efficiency of public spending, strengthen tax revenue collection, and foster transparency in managing debt.

A Gentle Reminder: Every obstacle is a stepping stone, every morning; a chance to go again, and those little steps take you closer to your dream.

Nnamdi Okoli