Africa’s loan defaults hit a record US$149.4 billion in 2022, the highest in 30 years. This increase has been attributed to the rising cost of borrowing and delayed repayments.
A report by the African Export-Import Bank (Afreximbank) attributes the growing debt crisis to the Covid-19 pandemic, Russia’s invasion of Ukraine, and global interest rate hikes aimed at controlling inflation.
East Africa has emerged as the most indebted region, with Kenya and Tanzania among the top loan defaulters.
Between 2017 and 2023, East Africa had a debt-to-GDP ratio of 54.5 percent, while Central Africa had the lowest average at 35.4 percent. West Africa ranked second, followed by North Africa and Southern Africa.
The report titled “State of Play of Debt Burden in Africa 2024” highlights that loan defaults increased significantly from US$100.2 billion in 2020 to US$149.4 billion in 2022. This financial strain has led to reduced investor confidence and divestment from the continent.
Afreximbank warns that the debt sustainability of African nations has worsened, with over half of the 52 countries assessed either at high risk or already in debt distress.
The report cites the challenging global economic environment as a key factor, noting that multiple crises continue to pressure fiscal revenues and contribute to sovereign default across the continent.
The Covid-19 pandemic, Russia’s invasion of Ukraine, and global interest rate hikes have pushed many African nations into debt crises.
A study by Afreximbank reveals East Africa as the most indebted region, with Kenya and Tanzania among the highest defaulters. East Africa’s debt-to-GDP ratio averaged 54.5% from 2017-2023.
Over half of the 52 African countries assessed face high debt risk or distress. Rising defaults have weakened investor confidence and worsened financial instability across the continent.