Africa’s Debt Burden Mounts as Continent Grapples With Rising Service Costs and Shrinking Fiscal Space
Africa’s total public debt stock reached $1.9 trillion in 2024, up from $1.6 trillion in 2020, as the continent continues to struggle with mounting debt pressures that show few signs of abating, according to the African Economic Outlook released by the African Development Bank at its Annual Meetings in Brazzaville, Congo.
The report paints a picture of a continent caught between the need for large-scale public spending and the structural constraints that make borrowing increasingly expensive. Between 2020 and 2024, Africa’s total public debt stock increased by approximately 4.4 per cent annually, driven by what the AfDB describes as “large public spending needs.”
There are, however, some cautiously optimistic signals. The debt-to-GDP ratio declined from an average of 63.9 per cent in 2023–24 to 62 per cent in 2025, and is projected to continue its downward trajectory to 61.4 per cent in 2026. The AfDB attributes this decline to a rebound in economic growth and fiscal consolidation efforts undertaken across several countries.
Yet the headline figures mask a more troubling reality beneath the surface. The changing structure of Africa’s public debt — a shift towards more expensive commercial borrowing and away from concessional loans — has driven up debt service costs substantially. The share of government revenue devoted to external debt service rose from 23.7 per cent in 2017 to 31 per cent in 2024, meaning nearly a third of what African governments earn goes straight to servicing external obligations rather than funding schools, hospitals or infrastructure.
This dynamic creates a vicious cycle. Higher debt servicing costs constrain fiscal space, which in turn crowds out government spending on the very services and infrastructure projects that could drive long-term economic growth. For many African nations, the question is no longer whether they can borrow, but whether the borrowing is producing returns that justify the cost.
The macroeconomic outlook, the report notes, will continue to be shaped by developments in both domestic and external factors. Persistently high oil and fertilizer prices could increase the prospects of a global economic slowdown, which would weigh heavily on African economies — particularly those dependent on commodity exports. Inflationary pressures could intensify and necessitate contractionary monetary policies, further eroding household purchasing power in countries where many families already spend the bulk of their income on food and basic necessities.
A weaker global macroeconomic environment combined with domestic structural rigidities across the continent could exacerbate debt vulnerabilities and constrain fiscal space even further. The report’s tone is measured but unmistakable: without deliberate reform and more favourable global conditions, Africa’s debt trajectory is unsustainable.
The findings come at a particularly relevant moment for Ghana, which has been working to stabilise its own fiscal position following the domestic debt exchange programme and broader economic restructuring of recent years. The African Development Bank recently projected 5 per cent GDP growth for Ghana in 2026, a forecast that exceeds earlier estimates from both the International Monetary Fund and the World Bank, suggesting that some countries are managing the difficult balancing act between growth and fiscal discipline more successfully than others.
At the broader continental level, the AfDB’s leadership has been vocal about the need for Africa to take greater ownership of its economic destiny. The bank’s president recently declared that Africa’s development must be shaped by African ambition and leadership, a statement that carries particular weight when viewed against the backdrop of the debt figures released this week. If the continent’s governments are spending a third of their revenue on debt service, the room for homegrown development initiatives is severely constrained.
The AfDB’s Annual Meetings in Brazzaville are expected to produce further discussions on how to address these challenges, including proposals for debt restructuring mechanisms, innovative financing instruments and stronger domestic revenue mobilisation. Whether these conversations translate into concrete action remains the critical question — one that Africa’s 1.3 billion people cannot afford to see answered with another round of communiqus.
Image Source: GHANA BUSINESS NEWS
