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Africa’s loans in default climbed to a record US$149,4 billion in 2022, the highest in three decades, as the rising cost of borrowing contributed to delayed repayments.
Many countries on the continent have found themselves in debt crises largely triggered by the Covid-19 pandemic, Russia’s invasion of Ukraine and a global wave of interest rate hikes to fight inflation.
The latest study by the African Export-Import Bank (Afreximbank) reveals that East Africa tops the list of the continent’s most indebted regions, with Kenya and Tanzania among the highest sovereign loan defaulters.
The East African economies had a relatively high debt-to-gross domestic product (GDP) ratio of 54,5 percent over the seven-year period (2017-2023), while those in Central Africa recorded the lowest average of 35,4 percent in the same period.
West African economies were ranked second, while North Africa and South Africa were ranked third and fourth, respectively.
The report, entitled State of Play of Debt Burden in Africa 2024: Dynamics and mounting vulnerability, shows that the amount of impaired loans procured by African countries increased from US$112,2 billion and US$100,2 billion in 2021 and 2020 respectively to US$149,4 billion in 2022.These defaults have not only triggered financial crises but have also led to years of divestment and a decline in investor confidence in the continent, according to the report, which shows that the debt sustainability of African sovereigns has deteriorated significantly and that more than half of the 52 countries assessed are either at high risk or already in debt distress.
“The sharp increase in sovereign default is attributed to the formidable global macroeconomic environment, characterised by intersecting crises that continually exert pressure on fiscal revenues,” the report says. – Business Insider Africa
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