Africa’s debt has reached high levels, with public debt soaring by 170% between 2010 and 2024, more than triple the global average increase of 54%, according to the latest Africa Economic Outlook by Bridgewater Advisors.
The surge has been attributed to multiple global shocks, including financial crises, the COVID-19 pandemic, and ongoing geopolitical tensions. Recent currency depreciations have further strained economies by increasing debt servicing costs.
Bridgewater warns that Africa’s debt challenges are compounded by an international financial system that struggles to provide affordable, large-scale liquidity for the continent’s development needs.
In response, African leaders have approved the creation of the African Financial Stability Mechanism (AFSM), a $20 billion fund housed by the African Development Bank.
The facility will offer concessional financing to countries that commit to sound macroeconomic and fiscal reforms. It is projected to save African countries approximately $20 billion in debt servicing costs by 2035.
However, experts caution that the fund is only a step toward a broader solution.
“Achieving lasting debt sustainability will require coordinated continental action, anchored in strong fiscal discipline, sound economic management, and improved domestic revenue mobilization,” said Prosper Melomey, Partner at Bridgewater Advisors.
Despite West Africa maintaining a relatively stable external debt-to-GDP ratio of 31% in 2024, Ghana and Nigeria posted the highest nominal debt increases, $6 billion and $2.5 billion, respectively. Nigeria alone accounted for nearly half of the region’s total external debt.
Looking ahead, Bridgewater projects Africa’s external debt to remain elevated through 2026. Southern Africa is expected to carry the heaviest burden, with debt levels rising to 31% due to South Africa’s fiscal strains and Zambia’s ongoing debt restructuring.
In contrast, Central Africa is projected to have the lowest external debt, at just 3%.
The report said that while recent reforms and initiatives like the AFSM are encouraging, sustained commitment to fiscal responsibility is vital to securing Africa’s long-term economic future.
