Nigeria Takes Top Position as Afreximbank Lists African Countries With Highest Debt
- Ten African countries, including Nigeria, are responsible for 69% of the continent's total external debt
- The others are South Africa, Egypt, Morocco, Mozambique, Angola, Kenya, Ghana, among others
- Africa's external debt levels are still high, due mostly to high interest rates and underdeveloped local financial markets
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Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
A survey by Afreximbank Research has shown that Nigeria is one of the top ten African nations that together account for 69% of the continent's total external debt.
Source: UGC
The study, "African Debt Outlook: A Ray of Optimism," which was published in late February, outlines the opportunities and difficulties African countries face in managing their debt.
Ten African countries accounted for 69% of the continent's entire external debt stock in the first half of 2024, up from 67% in 2023, according to the Afreximbank Research report.
Countries with the highest debt are listed below:
- South Africa - 14%
- Egypt -13%
- Nigeria - 8%
- Morocco - 6%
- Mozambique - 6%
- Angola - 5%
- Kenya - 4%
- Ghana - 4%
- Côte d'Ivoire - 3%
- Senegal - 3%
More on the report
The report stated that the continent's growing financial needs, which are mostly the result of pressures from population increase, are the main cause of this trend.
“Africa’s external debt levels remain elevated, primarily due to the limited development of domestic financial markets and high interest rates. The growing demand for foreign exchange to finance imports has further exacerbated external indebtedness, fuelled by reliance on aid, concessional loans from multilateral institutions, and competitive rates offered by private creditors.
“Since 2008, the external debt of African countries has escalated significantly, reaching approximately $1.16tn and representing 60 per cent of the region’s total public debt stock as of 2023. Projections indicate a slight increase to $1.17tn in 2024, with sustained growth anticipated, potentially reaching $1.29tn by 2028.
Nigeria's debt profile
The Debt Management Office reports that as of September 30, 2024, Nigeria's total public debt was N142.3 trillion, up 5.97 percent (or N8.02 trillion) from N134.3 trillion in June 2024.
Due to increased responsibilities to bilateral and multilateral creditors as well as sizable interest payments on commercial loans, debt servicing in the first three quarters of 2024 exceeded N7 trillion.
The larger problems that have led to Africa's mounting debt load are further clarified by the Afreximbank Research. These include the costs of healthcare, education, and infrastructure development in emerging nations, all of which sometimes call for substantial funding from loans and other debt instruments.
According to the paper, after the 2008 Great Financial Crisis, the total debt-to-GDP ratio increased by 39.3 percentage points, reaching 71.7% of GDP in 2023.
High international interest rates have made matters more complex and made debt service more difficult, especially in light of the substantial borrowing from non-traditional creditors such as private sector companies and new bilateral partners.
Afreximbank concluded that African debt exhibits signs of stabilisation in the medium term, driven by macroeconomic tailwinds, reduced interest rates, and improved access to capital markets.
While challenges remain, the region displays positive fiscal sustainability indicators as it navigates the post-crisis recovery landscape.
Foreign countries, institutions Nigerian government owes $43bn
Legit.ng reported that Nigeria owes over $42 billion to foreign institutions and countries as at September 30, 2024.
According to the data from the Debt Management Office (DMO), this sum represents unpaid debts accumulated from both present and past government administrations.
Recall that the DMO clarified that President Bola Tinubu’s inherited debt was N87 trillion, not N21 trillion, as some media reports claimed.
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Source: Legit.ng
