Africa’s Debt Crisis: Why Structural Reform Can No Longer Wait

Over the past 18 months, the conversation around debt on the international stage, especially concerning African countries, has become increasingly quiet. The 4th International Conference on Financing for Development (FfD4) took place in Seville, and South Africa raised the issue as part of its G20 presidency. However, a global response never really materialised. Why is that? What is the current situation regarding national debt on the continent?

Thank you for your question. This is an interesting perspective. On the contrary, I feel the debt conversation has continued to build momentum from Seville.

The debt situation in Africa is dire. Three African countries have defaulted and are still attempting to finalise their debt restructuring under the G20 Common Framework, these are Ethiopia, Ghana, and Zambia. Zambia is still not done four years after entering the Common Framework. Furthermore, in Africa, 24 countries are classified as being in debt distress and high risk of the overall debt distress. African countries owe US-Dollar 707.9 billion to external creditors as of 2024, African countries will pay US-Dollar 84.4 billion in external debt service in 2024, External debt owed by African countries is equivalent to 26.6 percent of their combined GDP in 2024. WIth such statistics, it is impossible to ignore the debt crisis afflicting Africa and her peoples. There is an urgency and necessity for the conversation to remain front of any discussions on financing for development.

The Sevilla Compromiso together with the Lome Declaration from the African Union Conference on Debt, both in 2025, have laid the foundations for addressing the debt crisis in Africa. The Sevilla Compriso, addresses architectural issues in  paragraphs 47 to 51 and 54 including the widely accepted ineffective G20 Common Framework. The language on debt in the Compromiso, I feel, is going to be at the centre of the financing for development going forward. At the African Union level, the Lome Declaration offers a comprehensive analysis of the debt crisis in Africa and a holistic assessment of a failing architecture perpetuating debt dependency and crisis on the Continent. It provides a set of proposals and recommendations for reforming the debt architecture to make it fit for purpose and beyond the Paris Club and the Common Framework by calling for a UN Framework Convention on Sovereign Debt, Debt Service Suspension, Introduction of Debt Pause Clauses, Borrower Coordination, to name a few proposals.

Post Seville, at the IMF and World Bank Spring meetings this year, 2026, the Launch of the Borrowers Platform, a direct ask from the Compromiso de Sevilla, is evidence of the debt conversation still at the centre of the conversation. The Borrowers’ Platform under the stewardship of UNCTAD indicates commitment by borrowing countries to be at the centre of addressing their own debt crisis in a coherent and coordinated manner. It is also consistent with the language in the Lome declaration adopted by the African Union during its Pan-African Debt Conference in May 2025 in Lome, Togo. Similarly, in February 2026, during the Heads of State Summit of the African Union, Member States adopted the Common African Position on Debt that seeks to strengthen Africa’s collective approach to debt sustainability, debt restructuring, and sustainable financing.

In the first question, I did not mention the recent G7 Summit that took place in Évian, France. Do you think the agreed ‘Leaders’ Declaration on Mutually Beneficial International Partnerships’ provides a starting point for renewed conversation on the debt crisis from the perspective of African countries?

The Declaration from Evian to a large extent is consistent with statements from previous G7 Summits. There is consistency in acknowledging the challenges affecting both the developed and developing world but less in proposing solutions that collectively make the world a better place. On the critical issues of peace and security and critical minerals, the declaration is clear on the need to use mutually beneficial international partnerships to advance the interests of the G7 members. History is a good lesson in demonstrating the skewed approach in what is supposed to be mutual beneficial partnerships. We have seen this very explicitly in the policies of some G7 members, for example, Borders are closed - visa Bonds1; increase in visa fees; heavily restricted visa issuance on the one hand, yet there close to open borders provided on the other; Carbon Border Adjustment Mechanism (CBAM) - an industrial protectionist policy that locks out the single largest market for Africa; security and puppeteering - instrumentalisation of African leaders to undermine African coherence and coordination; Tariffs - arbitrary disregard for multilateralism. These are not actions that would support the notion portrayed in the Evian Declaration on mutual beneficial international partnership.

History is a good lesson in demonstrating the skewed approach in what is supposed to be mutual beneficial partnerships. We have seen this very explicitly in the policies of some G7 members.

Perhaps the most divergent aspect of the declaration is that of the debt crisis affecting the developing countries across the world, not just Africa. The continued call for reforming the G20 Common Framework despite the UN Secretary General and IMF Managing Director criticising it for being frustrating and ineffective in providing timely and effective debt restructuring. The Common African Position on Debt and Lome Declaration also provide the same criticism as well as the three countries, Ethiopia, Ghana, and Zambia that are in or have been through the G20 Common Framework Process. This deviation is more pronounced given the progress we are seeing in implementing the commitments from Seville like the launch of the Borrowers Platform. In addition, beyond the debt burden faced by many African countries, the declaration is silent on the reverse flows from Africa to many G7 countries in the form of illicit financial flows, declining ODA, blended finance, debt servicing, and debt instruments. All these contribute to the perpetual debt burden and contracting fiscal space for African countries.

The G7 works in its own interests not that of Africa nor other parts of the world. We have seen this in Palestine, Iran, Ukraine, Venezuela, Sudan, to name a few. The peace and stability together with ‘innovative’ finance, or international cooperation, is all with maintaining the prevailing power and governance structures. The declaration can be credited with the consistency of previous summit declarations, but in reality, it is a little distant from the lived realities of African countries and her people.

Many African governments argue that the current international financial architecture leaves them with higher borrowing costs and limited fiscal space for health, education and climate adaptation. Does the declaration sufficiently recognise these structural inequalities, or does it place too much emphasis on domestic reforms without addressing the systemic barriers that African economies face?

The declaration actually ignores both the crowding out effect of debt servicing on financing health, education, and climate adaptation; and the systemic issues that create these structural inequalities. According to UNICEF’s The State of the World's Children Report 2025, a generation of children now faces compromised futures as countries struggle to service debt incurred before those children were even born. The report, together with UNCTAD’s World of Debt 2025 indicates that 45 of the world’s developing countries now spend more on interest payments than they spend on health, and 22 spend more on interest payments than on education. This creates a vicious cycle, especially in Africa: failing to invest in children weakens economies and further reduces countries’ ability to repay debt. Across Africa, per-capita spending on interest payments (US-Dollar 70) already exceeds spending on health (US-Dollar 44) or education (US-Dollar 63). 

Three countries are already in a debt default: Ethiopia from 2023, Ghana from 2022, and Zambia from 2020. Meanwhile Kenya is allocating 80 percent of its tax revenue to debt servicing, and Uganda 46 percent of its tax revenue to debt service to illustrate how the systemic issues I have referred to in question 2 translate into structural inequalities at the national level. Suffocation of policy and fiscal space undermines the argument for domestic reforms. The only domestic reforms currently being advanced are regressive tax policies in a bid to keep up with debt service repayments.

An important dimension to this situation is also how the problem is diagnosed. There are some who proffer the idea of the debt crisis being a liquidity or credit crunch, that is, countries do not have enough cash nor can they access credit due to unfavourable terms. While others believe it to be one of solvency, that is, incapable of paying the debt. In both situations, there are systemic and structural constraints. In the former credit rating biases and downgrades make debt expensive while in the latter regressive tax policies become normalised to keep up repayments. The declaration is silent on the latter believing it to be a liquidity issue. The situation in Africa based on present data is that it is a solvency issue and no amount of credit will remove the debt burden presently experienced.

Looking ahead to the implementation of this declaration, which policy commitment do you think the G7 should prioritise above all else if it genuinely wants to help African countries escape recurring debt crises and support their long-term economic sovereignty? What role can and should the German government play in this regard, given that it is not one of the major debtors?

Let me preface my response with this: Germany is a beneficiary of debt cancellation following the end of the second world war to rebuild its economy rapidly, prevent a repeat of the economic instability following World War I, and establish a strong, capitalist bulwark against the Soviet Union during the Cold War. And so there is, in my opinion, a moral imperative for Germany to support debt cancellation and reforming of the global debt architecture.

I think the declaration is more a political statement of understanding the state of the world as it is and how the prevailing conditions are impacting both developing and developed countries alike albeit in different ways. While it calls for the mutually beneficial international partnership, there details of what this means in reality is missing and thus, in my opinion, is not a declaration that meets the threshold for implementation. There are no concrete proposals in the declaration for implementing but rather statements of intent for fostering partnerships. 

Germany is a beneficiary of debt cancellation following the end of the second world war to rebuild its economy rapidly.

I would instead like to see members of the G7, such as Germany return to the Compromiso de Sevilla and pragmatically support the progressive proposals that were agreed as a way of forging a new dispensation for the financing for development agenda for Africa and developing countries. For instance, supporting a non-interest bearing debt service suspension initiative during restructuring might encourage African countries to enter into it. In light of climate change, conflict and economic shocks, consider introducing debt pause clauses as a new mechanism to support recovery programmes and protect citizens during crisis periods. Support the reform of the global debt architecture beyond the IMF and World Bank's three-pillar approach, and collaborate with developing countries to establish a UN framework convention on sovereign debt, similar to the one on taxation. The German government should enact legislation that offers debtor countries protection against bondholders and vulture funds. This is something that is being pursued in the USA (State of New York) and the UK.

And are there any approaches to tackling debt currently being adopted by African countries that you are watching closely, which might provide alternative ways of dealing with the issue of debt or offer different perspectives on it?

Yes, there are quite a number of moves happening on the continent that are worth noting. The first and most important one on the policy side is the implementation, domestication, and popularisation of the Common African Position on Debt. This is a critical moment for African countries to unite behind the Position and use it as a basis for developing coherent analysis and negotiation strategies. The second is promoting coordinated data and statistical collection mechanisms. The roll-out of the African Debt Monitoring Mechanism that can enhance data collection and debt transparency across the continent. At the National level, learning from the crowding out effect of the current debt restructuring processes, is looking at legislating thresholds on debt service ratios against tax revenues, and legislating for ringfencing social protection allocations. Both these measures will protect both policy and fiscal space that is at present heavily constrained.

A ticking time-bomb beneath the surface in Africa, is domestic borrowing. Domestic debt is on an upward trend as international commercial debt is less accessible, and at the same time, the same domestic debt is becoming more expensive and crowding domestic finance for local businesses. This will both have a risky domestic debt burden to financial markets, as well as reducing economic development and growth of local businesses and tax revenue mobilisation.

Overall, there are largely progressive moves at the continental and national levels to address the debt situation. However, in the absence of a comprehensive debt restructuring process, the debt crisis will remain both a systemic and structural impediment to Africa’s development.

Questions were asked by Elisabeth Massute.

The views expressed are solely those of the author and do not necessarily represent those of the Heinrich Böll Foundation.