A new report by the African Export-Import Bank (Afreximbank) has ranked Nigeria among the top three most indebted African countries, accounting for 8% of the continent’s total external debt. The report, African Debt Outlook: A Ray of Optimism, reveals that Nigeria, alongside nine other nations, holds 69% of Africa’s external debt stock.
South Africa leads with 14%, followed by Egypt at 13%. Other highly indebted countries include Morocco and Mozambique (6% each), Angola (5%), Kenya and Ghana (4% each), and Côte d’Ivoire and Senegal (3% each).
The report attributes the rising debt levels to external borrowing due to underdeveloped financial markets, foreign exchange volatility, and the need for infrastructure financing. It estimates Africa’s total external debt at $1.16 trillion in 2023, with projections rising to $1.29 trillion by 2028.
Nigeria remains active in international capital markets, recently issuing a $2.2 billion Eurobond to service debt obligations. The report highlights the increasing role of private creditors as multilateral institutions scale back lending. However, commercial borrowing comes with higher interest rates and shorter maturities, placing additional strain on public finances.
Afreximbank classifies Nigeria’s debt risk as “moderate” but warns that Africa’s average borrowing cost surged to 8.2% in 2024, up from 5.4–6.3% in previous years. Interest payments now consume a growing share of government revenue, adding to fiscal pressures.
Despite these concerns, the report presents an optimistic outlook, forecasting a decline in Africa’s debt-to-GDP ratio from 69.9% in 2024 to 61.7% by 2028. For Nigeria, improved fiscal policies, economic diversification, and expanded capital market access are expected to stabilise its debt trajectory.
Afreximbank recommends that African governments strengthen debt management strategies, enhance tax revenue collection, explore debt relief frameworks, and invest in manufacturing, agriculture, and renewable energy to promote long-term financial stability.
Credit: Nairametrics (Text Excluding Headline)
