The Africa Export and Import Bank (Afreximbank) has released a revealing report on the continent's debt situation, highlighting both challenges and potential opportunities for economic growth.

Key Debt Statistics

As of the first half of 2024, ten African nations accounted for 69 percent of the continent's total external debt, up from 67 percent in 2023. The top debt-holding countries are:

1. South Africa (14%)

2. Egypt (13%)

3. Nigeria (8%)

4. Morocco (6%)

5. Mozambique (6%)

Debt Trends and Projections

The continent's external debt has grown significantly, reaching approximately $1.16 trillion in 2023 and projected to increase to $1.17 trillion in 2024. By 2028, the debt could climb to $1.29 trillion, driven by population growth and increasing financing needs.

Debt Composition

- Long-term debt: 75% of total debt

- Short-term debt: 15.9%

- IMF debt: 8.9%

Recommendations for Debt Management

Afreximbank offers strategic advice for African countries to manage their external debt:

- Economic Diversification: Resource-dependent countries should expand their economic bases.

  - Nigeria is advised to invest in agriculture and manufacturing

  - Angola should develop its renewable energy sector

- Sustainable Borrowing: Countries should:

  - Avoid excessive reliance on commercial debt

  - Strengthen debt management institutions

  - Improve transparency and accountability

  - Establish social safety nets to protect vulnerable populations

Outlook

Despite challenges, the report suggests a ray of optimism. The region shows signs of debt stabilization, driven by:

- Improving macroeconomic conditions

- Reduced interest rates

- Better access to capital markets

The bank urges African countries to:

- Systematically reduce fiscal deficits

- Prioritize efficient public spending

- Enhance tax revenue collection

- Improve debt management transparency.