Type de publication : Rapport

Date de publication : Mai 2026

Site de l’organisation : https://acetforafrica.org

Auteurs : Richmond Commodore et George Baffour Awuah

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Les extraits proviennent des pages : 8, 9, 10, 11, 12, 13, 14, 19, 20, 21, 37, 38, 39, 40, 41, 42, 43, 54, 55, 56

Overview

Africa’s public debt challenge has re-emerged as a pressing concern in global policy discourse. During the 2010s, a complex mix of factors – including favorable commodity prices, greater access to international capital markets, and ambitious public investment programs – combined to drive sharp increases in borrowing. By 2019, Africa’s public debt burden had nearly doubled from about 30 percent of GDP a decade earlier to over 60 percent. The creditor landscape also became more diverse and shifted away from concessional funds towards more expensive, less transparent and shorter-dated instruments from private bondholders, non-Paris Club bilateral lenders, and domestic markets (Raga et al., 2022; Ekeruche, 2022).

The COVID-19 pandemic and subsequent external shocks exacerbated debt vulnerabilities, turning what began as fiscal pressures into systemic risks. Pandemic-triggered emergency borrowing, for instance, pushed average debt-to-GDP ratios from 61 percent in 2019 to 70 percent of GDP in 2020. Consecutive shocks (Russia’s attack on Ukraine and the associated inflation and supply-chain dislocation and an overly tight global monetary policy) led to currency depreciation in many countries, an increase of external financing costs, and widespread credit ratings downgrade (IMF, 2023; World Bank, 2023).

A significant number of countries lost access to the international capital market all together. By the end of 2023, over half of low-income African countries were in or at high risk of debt distress (IMF, 2024). The once episodic sovereign defaults, thus, became increasingly systemic, with Zambia (2020), Chad (2020), Ghana (2022) and Ethiopia (2023) requesting debt restructuring (IMF, 2023). Today, several African countries – including Kenya, Egypt, Angola, Nigeria – face high borrowing costs and liquidity pressures with debt service taking, in some instances, over 50 percent of revenues and crowding out social spending and public investments (Raga et al., 2022).

Climate risks are adding to these pressures. Climate shocks, including drought, flood, and other extreme weather events reduce revenue, generate recurrent response and reconstruction costs and increase cost of borrowing at a time when fiscal space is most constrained. Climate shocks impose recurrent fiscal cost through expenditure on emergency response, reconstruction, and social protection while at the same time undermining public revenue mobilization through the disruption of infrastructure, trade and agriculture.

Meanwhile, after climate shocks, African countries have been experiencing higher borrowing costs and more constrained access to external finance (Kling et al., 2018; Cevik & Jalles, 2022; Bellon & Massetti, 2022). Given the thin fiscal buffers in most countries, worsening climate conditions are inducing vicious climate-debt cycles: shocks worsen fiscal and external balances, debt service rises, and governments respond by borrowing more on increasingly expensive terms. In the absence of climate-smart frameworks, such a cycle erodes prospects of long-term growth and development.

Current sovereign debt resolution mechanisms have been found wanting in the face of a changed creditor landscape. The G20 Common Framework for Debt Treatment, launched in 2020 to address creditor coordination failures during crisis, has delivered only three African deals – all with significant delay and uneven implementation. Key challenges such as creditor fragmentation, collateralized lending, comparability of treatments and the absence of binding rules for private sector participation in debt resolution have exposed deep flaws in the current global debt architecture (UN, 2024).

In summary, Africa’s current debt predicament does not yet represent a continent-wide insolvency crisis, but the combined effects of complex creditor profiles, limited fiscal resilience, and climate-induced fiscal stress have created an increasingly fragile debt environment (UN, 2024). This reality demands a deeper and forward-looking assessment of Africa’s public debt landscape that goes beyond headline debt-to-GDP ratios to examine debt service capacity, institutions of governance, creditor coordination failures, and the alignment of borrowing with long-term development and transformation priorities. This paper assesses these issues, with a specific focus on:

• The evolution and composition of public debt in African countries over the past two decades.
• The drivers of public debt, their impact and implications for productive, long-term investments
• The effectiveness of proposed solutions like the G20 Common Framework for addressing debt crises in low and middle-income African countries.
• Lessons and policy recommendations based on the analyses to address debt challenges in African countries.

The analysis combines continent-wide data and in-depth country case studies to distill what can be generalized, what is context-specific, and which reforms – domestic and global – are critical to ensure that public debt supports rather than undermines Africa’s economic transformation. The research involved a comprehensive review of key global, regional, and national reports to compile a consolidated dataset of official statistics and policy documents, alongside academic research to unlock novel insights. The country case studies considered – Côte d’Ivoire, Ghana, Kenya, and Zambia – were selected to reflect Africa’s regional diversity, debt histories, and creditor profiles.

Drawing on evidence across the continent as well as the country case studies, the analysis draws lessons and practical policy recommendations to inform sound fiscal strategies, enhanced legal and institutional frameworks, and development-focused borrowing as part of Africa’s economic transformation agenda.

The Anatomy of Africa’s Recent Debt Wave (2000-2024)

Following debt relief in the 2000s, African countries rapidly increased borrowing, expanding their creditor base in the process. This section traces the evolution of public debt over the period 2000-2024, highlighting the compositional shifts and the now diverse creditor landscape. It also offers a comparative analysis of debt accumulation and sustainability across country groups, laying the foundation for understanding structural drivers of Africa’s current debt vulnerabilities.

Evolution of public debt in Africa

Africa’s debt dynamics since 2000 can be classified into four distinct phases:

• 2000-2008: Short debt reprieve following the 1996 Heavily Indebted Poor Countries Initiative
• 2008-2019: Renewed borrowing surge in an era of global liquidity
• 2020: Historic debt surge due to the COVID-19 pandemic
• 2021-present: Fragile post-pandemic stabilization, with emerging vulnerabilities

Each of the four phases reveals distinct drivers, risks, and policy dynamics shaping Africa’s debt sustainability (Figure 1).

Going back to the 2000s, Africa’s debt burden was on a downward trajectory following two debt relief efforts: the Heavily Indebted Poor Countries Initiative (HIPC) and the Multilateral Debt Relief Initiative (MDRI). Between 2000 and 2008, general government gross debt-to-GDP fell by nearly half, dropping from 65.1 percent to 33.7 percent. In hindsight, this period marked a missed window of opportunity to achieve lasting debt sustainability, as persistent structural weaknesses (e.g., narrow tax bases, weak financial management, commodity price volatility) and insufficient revenue reforms eventually raised debt levels and heightened debt vulnerabilities.

After the 2007-2008 global financial crisis, economic growth aspirations combined with favorable global conditions to increase borrowing – pushing continental debt burden from 33.7 percent of GDP in 2008 to 60.6 percent in 2019. This effectively wiped out the gains from prior debt relief initiatives (World Bank, 2023). Ambitious infrastructure and social investment needs inspired expensive market-based financing amid declining access to concessional funds as countries graduated to middle-income status (Raga et al., 2022; IMF, 2023). And after a decade of rapid borrowing, significant fiscal vulnerabilities had materialized by 2019. In many countries public debt was growing faster than GDP and debt service-to-revenue ratios were soaring (World Bank, 2023; AfDB, 2024).

The COVID-19 pandemic worsened existing vulnerabilities by deepening budgetary imbalances and increasing debt levels. The pandemic generated significant fiscal shock as government revenues plummeted and public spending soared, necessitating massive emergency borrowing. Total indebtedness jumped from 60.6 percent of GDP in 2019 to 70.3 percent of GDP in 2020 – an increase that drove continental debt burden above its highs in the early 2000s.

Following the initial pandemic shock, African countries experienced some debt stabilization between 2021 and 2023. The average debt-to-GDP ratio fell slightly from 70.6 percent to 68.5 percent largely due to economic recovery and nominal GDP growth – and to a lesser extent, temporary multilateral liquidity support, including the 2021 IMF Special Drawing Rights allocation and related emergency financing – albeit with significant country disparities (Afreximbank, 2024).

Commodity exporters (e.g., Angola and Nigeria) experiencing a boost from high prices achieved some stabilization gains, whereas oil-importers (e.g., Kenya and Ghana) faced increasing budget pressure due to higher cost of borrowing, currency depreciation, and higher import bills (AfDB, 2024). Crucially, debt-service pressures increased enormously, exacerbated by sharp global interest rate hikes, now consuming 30-60 percent of government revenues (AfDB, 2024; World Bank, 2023).

It is noteworthy that Africa is not alone in the recent debt surge. Public debt burdens have rapidly risen globally post-2008 among advanced and developing economies alike, possibly indicating common global drivers, including widespread fallout from the financial crisis and the 2014 terms-of-trade shock and policy responses (Coulibaly et al., 2019). In fact, in terms of debt burden, debt-to-GDP ratios in Africa and Sub-Saharan Africa are significantly lower compared to other world regions (Figure 2). This suggests that, outside countries already in debt distress, Africa’s debt challenge is increasingly driven by liquidity and refinancing pressures rather than unusually high debt stocks alone.

While Africa is not unique in experiencing a surge in public debt, its current debt wave is structurally distinct and particularly acute relative to the experience in other regions and to previous debt waves – especially considering the continent’s fiscal and institutional constraints. This raises sustainability concerns in several important ways. To start, the continent’s recent debt distress has primarily stemmed from unsustainable debt servicing arising from unaffordable borrowing causing serious liquidity pressures. The creditor mix is also diversified and complex including private lenders, non-Paris Club bilateral creditors, and domestic markets, complicating debt restructuring. In addition, there is heightened exposure to refinancing risks due to upcoming Eurobond maturities amid limited market access. Other distinctive characteristics include persistent transparency gaps involving hidden liabilities, resource-backed loans, and SOE debts that distort risk assessments. Also, heightening climate vulnerability increasingly affects sovereign borrowing costs (World Bank, 2023; IMF, 2023).

Overall, Africa’s current debt wave reflects multiple interacting vulnerabilities, posing a far more complex, murd-almensional challenge tan tose laced auring previous debt episodes.

Composition shifts of public debt

Underlying Africa’s rapid debt growth is a dramatic shift in debt composition. Since the early 2000s, traditional multilateral and Paris Club concessional financing has moved towards a much more fragmented, diversified mix including private bondholders, non-Paris Club bilateral lenders and rapidly expanding domestic debt markets. Consider first the elevated role of domestic borrowing in Africa’s debt profile. In 2008, domestic debt constituted 39.5 percent of total debt stock. By 2014, that share had increased to 45.6 percent (Figure 3). A continuous decline in the share of domestic borrowing after 2014 reversed in 2020, jumping from 35 percent in 2019 to 42 percent by the end of 2021 (AfDB, 2023).

The transition of Africa’s external liabilities from Paris Club lenders to non-Paris Club bilateral lenders and private creditors has been equally profound. The share of external debt held by multilateral institutions has been relatively steady. The greatest change has been the rise of non-Paris Club bilateral and private creditors. Over the period 2000-2019, the share of external debt owed to bilateral creditors excluding China fell massively, from 51 percent to 14 percent (Figure 4) Meanwhile, new creditors such as China and the Arab Gulf states (including Saudi Arabia and the United Arab Emirates) emerged as dominant bilateral creditors. Indeed, bilateral credit from China rose over the period from a mere 1 percent of external debt to 11 percent, which makes China Africa’s biggest bilateral lender. The share of external debt owed to private creditors also more than doubled over the period, from just 17 percent in 2000 to 45 percent in 2019.

Beyond these broad trends, however, considerable diversity exists at the country level.

While private and Chinese creditors have gained prominence in Africa’s external debt profile, these debt stocks remain highly concentrated in a few countries. For instance, in 2024 countries such as South Africa, Egypt, Angola and Nigeria accounted for more than 60 percent of private credit to Africa while Ethiopia, Kenya, and Nigeria feature prominently in Chinese bilateral loans.

In addition to the shift towards private and non-traditional bilateral creditors, Africa’s debt composition has also grown more complex with the rise of hybrid and collateralized financing arrangements, particularly after 2015 (IMF, 2023). These arrangement include resource. backed loan agreements in countries including Angola, Chad, Republic of Congo, Ghana and Guinea, and involving resources such as oil, minerals, or future export revenues (Ekeruche, 2022; Malik et al., 2021). For instance, in Chad, a $1.4 billion oil-backed facility (about 10 percent of GDP) was repaid through deductions from oil shipments and, when these proved insufficient, through oi royalties owed to the government – thus sharply tightening liquidity during the oil price downturn (IMF, 2021). Similarly in Angola, Chinese private and bilateral lending rose dramatically, reaching more than $17 billion. Estimates suggest that around 80 percent of this lending was oil-backed (S&P Global Ratings, 2022, cited in Reuters, 2024), underscoring how commodity-linked repayment structures can dominate the external debt profile of major borrowers.

Comparative analysis of risk profiles

Undeniably, the scale, speed, and consequences of recent debt build-up have been shaped by historical and structural factors such as debt relief history, income levels, resource endowments, and membership in monetary unions. Table 2 shows some of the structural correlates of deterioration in risk ratings between 2008 and 2022.

Countries within the CFA franc monetary union experienced slower debt accumulation and stronger sustainability metrics than non-CFA peers. This is largely due to stricter regional fiscal rules, external monetary anchors, and relatively stable inflation and exchange rate conditions under the monetary union. The relative resilience of the franc zone was clear during the 2020 pandemic: the zone saw 0.3 percent growth in 2020 while Sub-Saharan Africa recorded 1.7 percent recession. However, even among CFA countries, there is significant divergence, particularly in terms of risk transition.

While CFA countries like Burkina Faso, Cote d’Ivoire, Guinea-Bissau, and Togo experienced improvements in their risk ratings, others like Cameroon, Chad, Congo, Mali, and Senegal saw deterioration. Cameroon, for example, saw massive risk rating deterioration from low to high risk over the period 2008-2022. Even then, it is noteworthy that floating or managed exchange rates regimes in non-CFA countries such as Ghana, Zambia, Nigeria, and Kenya severely exposed foreign currency denominated debt portfolios to valuation shocks during instances of currency depreciation – for example, during the 2014-2016 commodity shocks, 2020 pandemic, and post-2021 global monetary tightening. This has the effect of amplifying interest costs, rollover pressures, and overall debt vulnerabilities (Ndulu & O’Connell, 2022).

Natural resource endowments also shaped debt accumulation dynamics with resource-intensive countries recording the greatest increases in debt accumulation. This observation is not surprising as such countries including Ghana, Mozambique, and Sierra Leone borrowed heavily against optimistic assumptions of future resource revenue that failed to fully materialize due to underperformance of commodity prices or delayed resource extraction (Afreximbank, 2024). Interestingly, among resource intensive economies, oil exporters (e.g., Angola and Nigeria) show a relatively low debt-to-GDP ratio.

While they witnessed a debt surge during the 2014-2016 slump in oil prices, recent increases in energy costs – further heightened by the war in Ukraine – increased revenue and reduced the debt burden (AfDB, 2024). On the other hand, non-resource-intensive countries including tourism-dependent economies show steadier, but not necessarily lower, debt accumulation paths, more closely tied to domestic policy management and fiscal governance (World Bank, 2023). Similarly, in terms of risk transitions, non-resource-intensive countries report relatively low-risk deterioration compared to resource-intensive countries.

Per income levels, debt accumulation trajectory has been more pronounced for low-income countries (LICs) than for lower-middle-income countries (LMICs). After the 2008 global financial crisis, the average public debt of LICs increased by 34.2 percent, reaching 76.2 percent of GDP in 2019, while that of LMICs experienced a smaller increase of 26.4 percent, reaching 57.4 percent of GDP over the same period. Beyond debt accumulation, LICs, on average, also recorded the worst deterioration in risk ratings between 2008 and 2022.

Mozambique and Somalia, LICs, for instance, recorded the worst risk transition from low risk in 2008 to distress in 2022, alongside Zambia, a LMIC. Still, there is divergence even among LICs and MICs, alike. For example, while LICs such as Mozambique and Somalia witnessed deterioration in risk rating from low to distress over the two years, others such as Democratic Republic of Congo, Guinea, Liberia, and Togo recorded improvements in risk rating from distress in 2008 to moderate risk of debt distress in 2022.

The commonalities and differences across and within country groups suggests that debt sustainability outcomes are shaped by complex interaction between pre-existing structural factors (income levels, resource endowments, monetary union membership, HIPC relief history) and institutional governance. The analysis point to the decisive role of public debt management and governance; countries with strong fiscal frameworks and institutions generally fared better, regardless of their resource endowments or income classification (AfDB, 2024).

For countries with poor public debt management frameworks, unchecked borrowing drove vulnerabilities as debt-service burdens mounted, complicating crisis response once shocks occur.

Notably, the COVID-19 pandemic and subsequent global shocks furthered the divergence, as countries with severe pre-existing vulnerabilities – largely fragile LICs and highly indebted LMICs with heavy Eurobond exposures – have been at the highest risks of debt distress (World Bank, 2023).

 Country Case Studies: Divergent Paths, Shared Lessons

While Africa’s debt challenges share common features, countries experience significant divergences shaped by political choices, institutional contexts, and economic structures. This section presents selected case studies in four countries – Ghana, Zambia, Kenya, and Côte d’voire – highlighting the different trajectories of debt accumulation and management, identifying successes and failures, and drawing lessons for future policy reform.

Ghana

After major relief under the HIPC and MDRI initiatives in the mid-2000s, Ghana entered the following decade with low debt, improved fiscal space, and growth prospects, supported by oil discovery and access to international markets. Beginning with its first Eurobond in 2007, market-based borrowing quickly rose, with Eurobonds increasing from 8 percent to 46 percent of external debt between 2012 and 2021 – primarily fueled by financial and energy sector debts. Similarly, domestic borrowing also expanded, with bond issuance doubling relative to GDP by 2015 as foreign investors were allowed into medium- and long-term bonds. In effect, public debt rose from below 30 percent of GDP in 2006 to 92.4 percent by 2022 – well above the Sub-Saharan average and above the sustainability thresholds defined by the IMF and World Bank.

By 2022, Ghana was in severe liquidity crisis as more than 70 percent of government revenues were spent on debt service payments and reserves were depleted to shore up the Ghana cedi.

Following a series of credit rating downgrades, the country lost access to the international capital market, while arrears piled up on both domestic and external obligations. Ghana ultimately defaulted in December 2022, becoming one of the first African countries to enter external restructuring under the G20 Common Framework. Despite slow progress due to creditor coordination challenges between Paris Club members, China, and private bondholders, the country eventually completed a $13 billion debt restructuring in early January 2025 – part of its 17th IMF program since independence in 1957.

Ghana’s debt accumulation over the past two decades has been driven by (i) persistent primary deficits of more than 6 percent of GDP; (ii) repeated election-year overspending; (iii) and overly optimistic oil revenue forecasts. The depreciation of the cedi further exacerbated these pressures, while contingent liabilities from SOEs (especially in the energy and cocoa sectors) and financial sector bailouts (7.1 percent of GDP) unearthed more vulnerabilities. A significant share of the borrowing financed recurrent expenditure and quasi-fiscal activities, rather than long-term productive investment, thus leaving the economy exposed to both domestic and external shocks.

To restore stability as part of commitments under the Common Framework, Ghana launched a controversial Domestic Debt Exchange Program (DDEP) in 2023, swapping high-interest bonds for longer-dated with relatively lower-yield instruments. The ramifications of the program led to significant losses for domestic banks and pension funds, crippling the country’s middle class. In May 2023, the IMF approved a $3 billion Extended Credit Facility, anchored in fiscal consolidation, revenue mobilization, and governance reforms. Ghana has also strengthened its legal framework with the Public Financial Management (PFM) Act, 2025 (Act 1136) (which repealed the PFM Act, 2016) and Fiscal Responsibility Act (2018) and by introducing new fiscal responsibility rules alongside annual borrowing plans and regular debt reports. But weak enforcement and credibility gaps persist.

Ghana’s experience shows that without fiscal realism, credible institutions, and stronger global coordination, rapid debt accumulation can swiftly reverse post-HIPC gains, even in reform-oriented economies. Key lessons also can be drawn for the average African economy:

• Overreliance on Eurobond markets and proceeds from commodities exposed the economy to shocks, while hidden liabilities and quasi-fiscal activities revealed governance gaps.
• Weak oversight allowed fiscal populism – and unbridled public expenditure increases in political cycles – to override discipline.
• Legal reforms improved transparency but remain undermined by poor enforcement and political economy dynamics.

Zambia

Zambia reached its HIPC completion point in the mid-2000s with a significantly reduced debt burden. But between 2011 and 2020, public debt rose sharply from $4.9 billion (20.8 percent of GDP) to $23.5 billion (117.8 percent of GDP). By December 2022, the country’s total debt stock had risen to $33.4 billion (120 percent of GDP). By November 2020, Zambia became the first African country to default, missing a $42.5 million Eurobond coupon payment. This led to an all-round default on Eurobonds, cutting off market access and worsening liquidity constraints.

A number of reinforcing pressures drove the country’s debt crisis, including (i) a copper price crash; (ii) persistent fiscal deficits (averaging double digits by 2020); (iii) overambitious public investment programs financed by commercial and Chinese loans; (iv) overreliance on costly non-concessional loans; (v) rising debt service and FX risks; (vi) weak fiscal management and oversight of SOEs; (vili) and of course the COVID-19 shock, which led to a -2.8 percent GDP contraction in 2020.

Debt service absorbed scarce revenues, while foreign exchange shortages and drought-related shocks in 2023-24 further constrained fiscal space. Interest payments as a share of revenue rose from 4.4 percent in 2010 to 44.5 percent by 2019 before falling to 27 percent by the end of 2021 following the country’s default on its debt obligations the previous year.

Eurobonds issuance drove currency depreciations and pushed primary deficits and interest expenses. As Zambia transitioned to lower-middle-income status in 2011, the country lost access to concessional loans and increasingly access Eurobonds and supplier credits. In addition, poor SOE oversight and fiscal management drove elevated contingent liabilities and hidden debts. For instance, according to the Ministry of Finance, as of December 2022 the government’s external debt stock stood at $14 billion, while guaranteed loans for SOEs totaled $1.5 billion, and non-guaranteed SOEs loans amounted to $91 million.

Zambia’s response to its public debt challenges involves a combination of measures implemented both independently and under the IMF program. However, participation in the G20 Debt Service Suspension Initiative (DSSI) and Common Framework represents a pivotal step towards debt sustainability, offering substantial relief measures such as debt maturity extension and concessional interest rates. Despite being the first country to apply for debt treatment under the Common Framework, Zambia’s process took over 30 months to conclude due to creditor coordination difficulties between Paris Club members, China, and private bondholders.

Eventually, in August 2022, the IMF approved a 38-month Extended Credit Facility of $1.3 billion for the country – later increased to $1.7 billion in 2024 to resolve the impact of drought on the economy. The program supported fiscal consolidation, revenue reforms, and restructuring negotiations. Domestically, the government enacted the Public Debt Management Act (2022) to strengthen oversight, while debt reporting improved under the National Planning and Budgeting Act (2020). Despite these steps, transparency gaps remain, and political economy issues, particularly regarding SOE and Chinese-linked debts, remain a risk.

Several lessons can be drawn from Zambia’s experience:

• Boom-time borrowing without fiscal buffers left Zambia highly vulnerable to shock.
• Reliance on Eurobonds and Chinese loans inordinately exposed the country to rollover, FX, and interest rate risks, ultimately impacting debt servicing.
• Weak institutional coordination and poor project appraisal reduced the efficiency of debt-financed investments.
• Post-2020 legal reforms improved oversight, but enforcement and transparency remain uneven.
• The drawn-out Common Framework process underscores the importance of early engagement with creditors and the need for more timely, predictable global debt resolution mechanisms.

Kenya

Kenya’s economy was performing well before 2020 but increasing debt vulnerabilities from the

COVID-19 pandemic and subsequent shocks exacerbated the country’s debt position, increasing public debt stock and the cost of debt service. The country’s debt-to-GDP ratio rose from 35.7 percent in 2011 to 59.1 percent in 2019, before spiraling to 68.4 percent in 2022. A sharp rise in external debt after 2013 shifted the composition of borrowing: external debt reached 52 percent of the total by 2020, with non-Paris Club creditors and commercial loans, especially from China, playing a dominant role. In May 2020, the IMF downgraded the country’s risk of external debt distress from moderate to high due to elevated vulnerabilities following the pandemic. Less than one year later, in April 2021, Kenya’s debt-carrying capacity was downgraded from strong to medium.

By 2022, yearly debt service payments had exploded – from KES 114 in 2012 to KES 918 billion in 2022 – threatening fiscal sustainability even though Kenya avoided default. IMF-World Bank Debt Sustainability Assessments in 2023 rated Kenya at high risk of debt distress as interest payments consumed more than 20 percent of government revenues, while large Eurobond repayments, including a $2 billion bond maturing in 2024, heightened rollover risks. The steep depreciation of the Kenyan shilling and reliance on short-term domestic borrowing further elevated liquidity pressures, while limited access to concessional funds left the government exposed to costly market risks financing. Public backlash and heated protests against new tax measures in 2024 highlighted the political economy challenges of fiscal consolidation and sustainability.

The major drivers of Kenya’s debt crisis have included (i) persistent fiscal imbalances; (ii) low domestic revenue mobilization (tax-to-GDP ratio of about 15.6 percent lagged regional peers); (iii) a focus on an infrastructure-led borrowing model for growth; (iv) greater reliance on Eurobonds, syndicated loans, and Chinese bilateral credit; and (v) repeated election-cycle spending. Like Ghana and Zambia, quasi-fiscal activities, and contingent liabilities from SOEs such as Kenya Airways and major transport projects heightened hidden risks.

In response to the crisis, Kenya authorities took several steps towards debt sustainability, including fiscal consolidation, improvements in public debt management, partaking in the DSSI, deployment of non-debt creating financing instruments, and domestic debt market reforms.

Even before the pandemic, Kenyan authorities were pursuing fiscal consolidation through improvements in revenue mobilization and rationalization of public expenditure. At the height of the COVID-19 crisis, Kenya participated in the DSSI and had reliefs under the initiative – a significant cushion as the authorities struggled to finance a huge fiscal deficit in a very constrained fiscal space. Still, it was not enough to help the country avert its looming debt crisis.Kenya ultimately evaded debt default by leaning on multilateral support and liability management.

In 2021, it entered a three-year, $2.34 billion IMF Extended Credit Facility – later expanded to $3.6 billion – to anchor fiscal and governance reforms. The accompanying policy measures to rein in the debt situation included rather controversial VAT reforms, digital service taxes, and higher fuel levies.

The government also pursued liability management, including partial buybacks of the 2024 Eurobond, to ease rollover risks. Institutional reforms included greater scrutiny of contingent liabilities, efforts to strengthen public investment management, and steps to improve fiscal risk reporting. Nevertheless, the country faces rising debt service-to-revenue ratios, constrained external market access, and looming Eurobond maturities in 2027. Yet the absence of a standalone debt law and delays in creating an independent debt authority have limited the credibility of debt management reforms.

Several lessons can be drawn from Kenya’s experience:

• Non-defaulting but high-distress countries – those facing liquidity but not solvency challenges – still face significant risk.
• Infrastructure-led borrowing without strong project appraisal and cost recovery undermines debt efficiency, while Eurobond reliance without adequate foreign exchange buffers heightens vulnerability to shocks.
• Revenue mobilization is more sustainable through widening the tax base rather than unpopular and unjustified ad hoc levies.
• Strengthening accountability through a dedicated debt law and independent debt authority could enhance long-term fiscal sustainability and restore investor confidence.
• Fiscal consolidations efforts should occur through spending rationalization, with concessional borrowing used primarily to finance public investments.

Côte d’Ivoire

Since the end of the political crisis in 2011, Côte d’Ivoire has experienced rapid economic growth, with an average annual GDP growth rate of 8.2 percent between 2012 and 2019. The country’s public debt has also followed a gradual but steady upward path since HIPC/MDRI relief in 2012.

Debt-to-GDP ratio increased from 32.4 percent in 2013 to 46.3 percent in 2020, peaking at 58.1 percent in 2023 before easing to 54.6 percent in 2024. A defining feature of the country’s debt trajectory has been the shift in the composition of debt, which has seen Eurobond issuances rise from just 2 percent of total debt in 2012 to 21 percent by 2022; bondholders accounted for 36 percent of external debt by March 2024.

Despite this tilt toward costlier commercial borrowing, Côte d’Ivoire has generally maintained balance through concessional financing (which is nearly 40 percent of its external portfolio) and by leveraging access to WAEMU regional markets under the CFA franc zone. Domestic debt has expanded mainly via medium-term treasury securities, largely absorbed by local banks and institutional investors.

The major drivers of rising debt in the country have included (i) ambitious public investment programs under the 2016-2020 and 2021-2025 National Development Plans; (ii) a reliance on Eurobond financing; (iii) persistent fiscal deficits that widened during the pandemic due to health spending, fuel subsidies, and SOE support; and (iv) rising interest costs and exchange rate risks that currently weigh heavily on fiscal space. While concessional financing and regional market access have provided buffers, the growing role of commercial borrowing has raised medium-term vulnerabilities.

Unlike many of its peers, Côte d’Ivoire is yet to experience a full-blown debt crisis. Still, rising vulnerabilities have emerged; as of 2023, the country’s debt service as a share of tax revenues was more than 40 percent, while interest payments reached 3.4 percent of GDP. Global rate hikes and geopolitical shocks in 2022-2023 raised Eurobond yields and shut off the country’s access to affordable financing, leaving it exposed to refinancing pressures amid lagging fiscal consolidation and high pre-election spending.

Debt service figures increased consistently over the years, reflecting rising debt obligations relative to the size of the economy. In addition, stock-flow adjustments are critical drivers of the country’s debt-to-GDP ratio. These adjustments capture fiscal flows that generate additional liabilities beyond conventional government expenditures, such as bailouts to struggling SOEs, guarantees on loans materializing as debt for SOEs, or government financing of recent large infrastructure projects through borrowing or public-private partnerships with contingent liabilities.

The government’s response to contain the rising public debt vulnerabilities has been multifaceted.

• The country has repeatedly participated in IMF-supported programs – nearly 20 since 1980.

Most recently, in May 2023, Côte d’Ivoire secured a 40-month IMF-supported program worth approximately $3.5 billion under the Extended Credit Facility and Extended Fund Facility.

• It has implemented a medium-term debt strategy that prioritizes lengthening maturities, mitigating rollover risks, promoting concessional and euro/CFA-denominated borrowing to limit FX risk, and tapping semi-concessional external windows and regional markets while avoiding maturity bunching.
• It conducted a 2020 liability-management operation and joined the DSSI early to curtail its debt costs and responded to refinancing and FX-exposure risks by favoring longer-dated, • It leveraged C2D arrangements with France and Spain to convert repaid debt into grants for jointly selected projects (notably water and energy).

The government aims to narrow the fiscal deficit to 3 percent of GDP by 2025 to keep public debt below 60 percent of GDP, supporting macroeconomic stability and implementation of the national development plan. Institutional reforms have strengthened the institutional framework, including the adoption of an organic debt law in 2024, creation of a National Committee on Public Debt, and the establishment of a unified debt and treasury management office. Nonetheless, gaps remain in reporting contingent liabilities, integrating debt data with broader PFM systems, and ensuring transparent communication with investors.

Côte d’Ivoire’s case provides numerous lessons:

• Even without default, gradual debt build-up can erode fiscal space and increase refinancing risks.
• Balancing concessional, regional, and commercial borrowing helps mitigate external shocks, but Eurobond reliance requires proactive liability management.
• Large-scale infrastructure and social spending must be paired with rigorous project appraisal and fiscal anchors.
• Continued institutional strengthening, including improved reporting of contingent liabilities and investor communication, will be essential to sustaining debt sustainability in the years ahead.
• Careful vetting of Chinese loans ensures only proportionate, commercially sound projects with measurable returns, preserving debt sustainability and credibility.
• C2D arrangements can turn repaid debt into grants for jointly chosen projects, safeguarding development delivery while easing debt burdens.

Comparative takeaways

Three lessons clearly emerge from the four country cases.

First, debt sustainability depends more on fiscal discipline and institutional strength than headline debt ratios. Ghana and Zambia entered default after fiscal populism in election years eroded buffers and delayed reform. In both countries, weak fiscal anchors and lack of transparency around SOE liabilities compounded risks. In contrast, Côte d’Ivoire through WAEMU criteria maintained stronger fiscal rules, while in Kenya, relatively strong institutional frameworks helped preserve some investor confidence. In effect, there were divergent outcomes across these countries despite having broadly similar debt-to-GDP burdens.

Second, resilience or vulnerability is shaped by the mix of creditors and financing instruments. This is because they either amplify or mitigate refinancing risk. Heavy reliance on Eurobonds by Ghana and Zambia left them highly exposed to global rate hikes and market closures. Similarly, Kenya also relied on Eurobonds but complemented this with domestic borrowing and IMF support, easing rollover risks. But Côte d’Ivoire pursued a more balanced strategy diversifying funding sources by blending concessional, regional, and commercial financing. Together, these choices determined whether a country faced abrupt liquidity crunches or enjoyed smoother refinancing.

Third, the timing of reforms and political agency matter as much as economics. Delays in seeking IMF support deepened Ghana’s and Zambia’s crises, while pre-emptive engagement in Kenya and consistent rule-based management in Côte d’voire limited damage. Ghana’s late and politically fraught domestic debt exchange contrasts sharply with Côte d’Ivoire’s proactive liability management.

Kenya avoided default through Eurobond buybacks and revenue measures, but at the cost of public unrest. Côte d’voire, underpinned by stronger institutions, avoided restructuring altogether.

To summarize, debt sustainability is not dictated by ratios alone. The four country cases point to the critical essence of credible fiscal rules, transparent borrowing, and diversified financing in reducing vulnerability to shocks. Conversely, delayed reforms, heavy reliance on costly external debt, and weak institutions lead to crisis.

Recommendation. Mitigate the impact of shocks by accelerating economic transformation, while building shock buffers and contingency financing to reduce pro-cyclical borrowing.

A key finding of this study was how the impact of shocks – which tend to widen deficits, weaken growth, intensify foreign exchange pressures, and raise borrowing costs – complicates the debt dynamics for many African countries. This vulnerability is particularly acute in resource-dependent economies, where revenue volatility amplifies pro-cyclical fiscal behavior. To mitigate these risks, governments should prioritize the establishment of rules-based buffers and pre-arranged contingency financing measures like contingency funds, contingent credit lines, and disaster risk instruments. Failure to build such buffers increases the likelihood of abrupt fiscal consolidation or debt distress when shocks materialize. Over the medium term, disciplined buffer accumulation is fiscally less costly than repeated crisis-time borrowing.

 Sequencing and mapping of recommendations across levels

The recommendations presented in the previous section operate across national, regional, and global levels, but they differ in urgency, feasibility, and the time required to deliver results.

• Immediate reforms (1-2 years) focus on restoring credibility and reducing liquidity stress through stronger fiscal anchors, full transparency, enforceable borrowing controls, and clearer debt risk limits (Recommendations 1, 2, 3, and 8).

• Medium-term reforms (3-5 years) focus on building resilience by strengthening debt management capacity and coordination, improving the efficiency of debt-financed spending, scaling non-debt financing, institutionalizing fiscal risk management, and establishing shock buffers (Recommendations 4, 5, 6, 9, and 10).
• Systemic reforms (5+ years) focus on locking reforms into durable rules and shifting the global architecture – including stronger restructuring mechanisms and expanded predictable financing (Recommendation 7).

To maintain coherence with the reform pathway approach, Table 8 maps the ten recommendations across national, regional, and global action areas and time horizons.

Conclusion: Toward a Resilient Debt Future

Africa’s debt challenge is a development challenge. While debt ratios do not yet signal a continent-wide debt crisis, a combination of high borrowing costs, short maturities, elevated debt levels, fragmented creditors, and climate shocks has created an increasingly fragile debt landscape. For many African countries, debt service now consumes more fiscal space than essential social investments, and this undermines both growth and resilience. The roots are structural as much as cyclical. Global shocks – from the global financial crisis to COVID-19 and climate disasters – have interacted with domestic fiscal weaknesses, governance gaps, and a shift toward costlier, less transparent debt. In effect, the continent’s debt profile is now more complex and risk-prone relative to the past.

Resolving this wave of debt fragilities demands coordinated and mutually reinforcing reform agendas at the national, regional, and global levels. Domestically, reform priorities include strong legal frameworks, autonomous and capable debt management offices, stronger fiscal anchors, integrated public investment management, binding transparency rules, and improved parliamentary oversight. Strengthening fiscal risk management – particularly for SOES, guarantees, PPPs, and arrears – is also critical to preventing sudden debt shocks. Fiscal discipline will remain vulnerable to political cycles and hidden liabilities in the absence of these reforms. At the global level, reform priorities encompass a faster, binding, and more inclusive debt resolution mechanism; scaled-up concessional and climate-linked finance; and multilateral lending reforms to meet Africa’s adaptation and transformation needs. In the absence of these reforms, African countries will continue experiencing liquidity shocks that cascade into protracted crises.

The window for action is short and closing. The cost of inaction will escalate rapidly given persistently increasing cost of external financing, the Eurobond maturity wall between 2024-2027, deteriorating terms of trade, and intensifying climate risks. Yet, today’s debt fragilities could be turned into an opportunity for more sustainable, climate-resilient growth. This requires coordinated domestic and global reforms that align borrowing with Africa’s long-term transformation while reducing FX exposure, rollover risk, and the fiscal burden of debt service.

Debt sustainability is not a technocratic goal; it is a foundation crucial to economic transformation, social investment, and climate resilience in Africa. Achieving this would require serious political will at home, stronger regional coordination, and renewed multilateralism abroad – including reforms that reduce restructuring delays and expand predictable liquidity and climate-linked finance. The shared objective must be to shift debt from being a trigger for crisis to an instrument for development.