The African Development Bank, AFDB, says African countries will spend $74 billion in 2024 to meet their debt servicing obligations. The AFDB made this known through its Chief Economist and Vice President of Economic Governance and Knowledge Management, Professor Kevin Urama, who spoke during the launch of the debt management forum in Abuja on Monday.
Urama harped on the mounting debt burden in Africa with the $74 billion needed in 2024 a major increase compared to the $17 billion spent in 2010. Also, $40 billion of the $74 billion is owed to private creditors, representing around 60% of the total debt stock.
The figure could in fact be higher when other debts and contingent liabilities are considered with around 20 African countries facing a high risk of being in debt distress. The rising cost of living, reduced revenue inflow and unstable currency of many of these countries have compounded their woes and made it difficult to meet up with these debt obligations. This has made the countries borrow more to finance their budget deficit and meet other obligations. It has also prompted others to find other revenue sources like bond issuance and economic diversification.
Urama further highlighted the liquidity challenges that Africa encounters, noting that the annual requirements for debt refinancing are anticipated to reach $10 billion from 2025 to 2033. Additionally, he pointed out that African Eurobond yields escalated to 15% in 2023, which is more than twice the rate observed in 2019, thereby complicating refinancing initiatives.
To address this problem, Urama called for an Africa-centric solution which can come through re-thinking our borrowing pattern and prioritising productive investment
