A new report by the African Export-Import Bank (Afreximbank) has revealed that three African economic giants—South Africa, Egypt, and Nigeria—are responsible for more than one-third of the continent’s external debt stock, raising fresh concerns over the vulnerability of Africa’s debt profile and the broader implications for regional economic stability.
The Afreximbank report Titled “State of Debt Play in Africa and the Caribbean”, the report employs a debt sustainability analysis (DSA) framework to assess fiscal dynamics across Africa and the Caribbean Community (CARICOM), drawing attention to emerging debt vulnerabilities, macroeconomic fragilities, and refinancing risks.
According to the Afreximbank data, South Africa accounts for 13.1% of Africa’s external debt, Egypt follows with 12%, and Nigeria holds 8.4%. Together, they control approximately 33.5% of the continent’s foreign obligations.
Other significant debt holders include Morocco (5.9%), Mozambique (5.4%), Sudan (5.2%), and Kenya (4.1%), while more than 30% of Africa’s debt is spread across smaller economies grouped under the “others” category. The report warns that this debt concentration poses systemic risks that could ripple across borders.
“Fiscal distress in any of these countries could trigger wider regional repercussions through investor sentiment, trade interlinkages, and cross-border financial channels,” Afreximbank cautioned.
Nigeria’s debt burden, which stood at ₦144.6 trillion as of December 2024, has been a source of growing concern. External debt accounts for ₦62.9 trillion of that figure, with debt servicing consuming ₦13.12 trillion in 2024—an alarming 68% rise from ₦7.8 trillion in 2023.
The sharp depreciation of the naira—shedding 69% of its value against the US dollar between June 2023 and March 2025—has further compounded Nigeria’s fiscal woes, significantly inflating the local currency cost of servicing external debts.
With rising debt obligations diverting funds from critical social sectors, analysts warn that Nigeria’s fiscal space is shrinking rapidly.
“The mounting cost of debt service is crowding out essential government spending on health, education, and infrastructure,” said Dr. Remi Adebayo, a Lagos-based economist. “This puts Nigeria’s long-term development at serious risk unless urgent reforms are enacted.”
Across the continent, Afreximbank notes a fragile recovery following the COVID-19 pandemic and global monetary tightening. While there are signs of cautious debt stabilisation, systemic vulnerabilities remain widespread—especially in nations reliant on volatile commodity exports and narrow tax bases.
The report highlights that private creditors now account for over 40% of external debt in some countries, increasing exposure to market volatility and refinancing risks.
Between 2023 and 2025, Africa’s debt outlook has deteriorated. Updated projections from April 2024 show a 0.5% increase in debt-to-GDP ratios for 2024, and a further 0.8% increase expected in 2025 compared to October 2023 forecasts.
“Depreciation of local currencies and persistent subsidy spending are pushing debt levels higher and making fiscal consolidation harder,” the report notes.
Despite near-term challenges, the medium-term (2026–2029) outlook provides some room for optimism. Forecasts anticipate a decline in Africa’s average debt-to-GDP ratios—by 0.4% in 2027, 0.6% in 2028, and 1% by 2029. This, however, is contingent on effective policy execution and sustained governance reforms.
Afreximbank recommends comprehensive structural reforms focused on:
Expanding fiscal space
Boosting domestic revenue mobilisation
Reducing over-reliance on external financing
Transitioning from commodity-dependent to diversified, productivity-driven economies
The report also stresses the importance of improved debt transparency, sustainable borrowing practices, and the reconfiguration of public financial management systems.
“Africa’s sustainability path depends on moving from extractive growth models to economies rooted in innovation, value addition, and resilience,” the report concludes.
As Africa grapples with escalating debt service costs and currency volatility, the Afreximbank report serves as a wake-up call for urgent regional collaboration and national reforms. For heavily indebted countries like Nigeria, the clock is ticking to adopt long-term strategies that ensure debt sustainability while safeguarding public welfare.