African nations, including Nigeria, require approximately $74 billion for debt servicing in 2024, highlighting the continent’s worsening debt crisis. Speaking at the launch of the Debt Management Forum for Africa (DEMFA) in Abuja, AfDB’s Chief Economist, Prof. Kevin Urama, noted that structural issues in the global debt system, macroeconomic vulnerabilities, and rising debt refinancing costs have contributed to the continent’s mounting debt burden. The cost of debt servicing diverts critical resources from infrastructure and development, hampering growth and exacerbating economic vulnerabilities. With public debt levels stabilizing but debt servicing costs increasing, African nations face limited access to affordable financing.
Prof. Urama emphasized the growing reliance on high-cost private sector loans, which now account for nearly half of Africa’s debt, as a significant challenge. Borrowing in international markets often costs African countries five times more than borrowing from multilateral institutions like the AfDB. Coupled with limited access to global emergency funding, this creates a cycle of low investment, weak economic growth, and increasing debt vulnerability. The continent also faces substantial capital outflows due to high-risk premiums and illicit financial activities, further straining domestic resource mobilization. DEMFA aims to address these challenges by building capacity in public debt management and fostering sustainable borrowing practices tailored to Africa’s needs.
African Finance Ministers and experts at the forum underscored the urgency of reforming global financial systems to enable fairer access to development financing. They called for innovative tools to break the cycle of debt distress and unlock funding for critical areas such as climate adaptation, infrastructure, and social development. AfDB initiatives, such as the African Debt Managers Initiative Network, aim to strengthen debt management practices and promote knowledge-sharing among member nations. The forum’s focus on home-grown solutions is seen as a critical step toward