Africa’s total external debt is expected to surpass $1.3 trillion by 2025 and continue to increase gradually through 2029, albeit at a slower pace than the sharp rise recorded between 2016 and 2022.
This is according to Afreximbank’s half-year report, which notes that the trajectory of Africa’s foreign debt has begun to stabilise amid changing global financial conditions and evolving domestic fiscal strategies.
A breakdown of the debt concentration reveals 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.” This uneven distribution creates systemic vulnerabilities, 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.
Between 2023 and 2029, Africa’s external debt structure has undergone notable changes in both volume and composition. The recent plateau in borrowing suggests a deliberate shift, driven by limited access to global capital, high interest rates, and a cautious fiscal posture among governments seeking to preserve sustainability in the face of growing debt servicing demands. While the borrowing curve remains upward, the pace of debt accumulation appears to be moderating.
Encouragingly, 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.
Yet, 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.
Foreign exchange reserve adequacy has also weakened significantly, with 26 African countries anticipated to fall short of the IMF’s 3-month import cover benchmark in 2025.
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.