Large government debts, particularly in some African nations, could trigger a slew of economic challenges. These challenges often include currency depreciation and a loss of investor confidence, amongst other things. As a result, governments are tasked with the responsibility of easing its debt load, even though many fail to do so.
Sub-Saharan Africa’s external public and publicly guaranteed (PPG) debt has been on an upward trend within the last decade. This is according to the World Bank’s latest Africa Pulse report released in October.
The report notes that the debt in SSA has more than quadrupled since 2006. PPG’s total external debt increased from US$108 billion in 2006 to US$462 billion in 2022.
In Sub-Saharan Africa, bilateral Paris Club creditors provided less external funding, while bilateral non-Paris Club creditors provided somewhat more.
In 2006, bilateral Paris Club creditors accounted for 22% of foreign debt in Sub-Saharan African countries, a figure that would fall to 5% by 2022.
Prior to the global financial crisis, Sub-Saharan Africa’s top six bilateral creditors were France, China, the US, Japan, Saudi Arabia, and Kuwait. Now China leads the way.
Debt-to-GDP ratio in Sub-Saharan Africa
The debt-to-GDP ratio is an important measure of a country’s debt sustainability.
Countries with high debt-to-GDP ratios are perceived as riskier by foreign investors, resulting in higher interest rates on future loans. This escalates the cost of debt servicing, resulting in a vicious cycle of borrowing to repay previous debt.
Furthermore, lower government spending on essential services: When a large amount of a government’s budget is dedicated to debt service, less money is available for key sectors such as healthcare, education, and infrastructure development.
With that said, here are the 10 Sub-Saharan African countries with the largest debt as a percentage of its GDP, according to the Africa Pulse report.
Top 10 African countries with the largest government debts mid-2024
Rank Country General government debt (% of GDP)
1. Eritrea 210.6%
2. Sudan 146.5%
3. Zambia 107.5%
4. Cabo Verde 107.1%
5. Mozambique 97.5%
6. Congo 94.7%
7. Zimbabwe 87.2%
8. Malawi 85.4%
9. Ghana 82.4%
10. Mauritius 79.1%
Source: Business Insider Africa
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