BY PETER USMAN 

Afreximbank has reported that Africa’s total external debt is expected to surpass $1.3 trillion by the end of 2025.

It said that the debt may continue to increase gradually through 2029, albeit at a slower pace than the sharp rise recorded between 2016 and 2022.

Afreximbank’s half-year report, revealed that the trajectory of Africa’s foreign debt has begun to stabilise amid changing global financial conditions and evolving domestic fiscal strategies.

Breakdown of the debt concentration revealed that South Africa (13.1%), Egypt (12.0%), and Nigeria (8.4%) collectively hold more than one-third of the continent’s total external debt stock.

Other major debt holders include Morocco (5.9%), Mozambique (5.4%), Sudan (5.2%), and Kenya (4.1%). More than 30 percent of Africa’s foreign debt is spread across smaller economies classified under “Other.”

According to the report, this uneven distribution creates systemic vulnerabilities, and fiscal instability in any of the major debt-holding nations could trigger ripple effects across the region through investor sentiment, trade relationships, and interconnected financial systems.

Africa’s debt-to-GDP ratio is forecasted to decline by 2028, bolstered by improved economic growth and the adoption of longer-term debt instruments. Still, the continent faces stiff headwinds from persistently high borrowing costs, increased exposure to private creditors, and sustained sovereign risk. Central government debt across Africa is projected to stabilise slightly above 55 percent of GDP by 2029, down from a peak of nearly 63 percent in 2020.

Meanwhile, the financial stress remains acute: as of 2025, 14 African countries are expected to surpass the 180 percent debt-to-exports threshold, while 25 nations will exceed the 20 percent debt service-to-revenue ratio, clear signs of enduring external fragility and fiscal strain.

However, the outlook for debt servicing shows a slight improvement from 2025 onward, with projections indicating a gentle decline in pressure. This shift is attributed to multiple factors: reduced levels of new commercial borrowing, better inflation control across many African economies, and the easing of global interest rates in response to monetary policy adjustments in advanced markets.

Countries that implement meaningful domestic reforms such as tightening public spending, realigning subsidies, and ramping up revenue mobilisation are likely to experience the greatest relief.

Despite the softening trend, the interest-to-GDP ratio will remain historically elevated through 2028, particularly in fiscally fragile economies like Ghana and Nigeria. This highlights the long-term challenges associated with high-cost borrowing and limited fiscal buffers.

According to the report, macroeconomic stability will continue to hinge on the sustainability of public debt, which is now a cornerstone of economic risk assessment frameworks. The Debt Sustainability Analysis (DSA) is central to this evaluation, offering insight into a country’s ability to meet debt obligations through key solvency indicators such as debt-to-GDP and debt-to-exports ratios. Liquidity is assessed through metrics like debt service-to-revenue and debt service-to-exports ratios, along with reserve adequacy, creating a comprehensive picture of fiscal resilience.