Nigeria and other African countries will require $10 billion annually for debt refinancing between 2025 and 2033, the African Development Bank (AfDB) said on Tuesday, raising concerns over the continent’s rising debt crisis.
The warning came during the launch of the Debt Management Forum for Africa (DeMFA) in Abuja, where policymakers were urged to adopt growth-focused debt policies to tackle mounting obligations.
“Africa’s debt servicing costs have surged sharply, diverting resources away from critical infrastructure and economic growth,” said AfDB Vice President and Chief Economist, Prof. Kevin Chika Urama. “From $17 billion in 2010, debt service payments are projected to hit $74 billion in 2024, with private creditors accounting for 54%.”
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The rise in private debt ownership has doubled African Eurobond yields to 15% in 2023, compared to 7% in 2019. “Short-term debt at high costs poses severe refinancing risks, particularly for nations with bullet repayments,” Urama added.
According to the AfDB’s 2024 African Economic Outlook report, debt service costs have increased to 12.7% of GDP (2020-2022), up from 8.4% between 2015 and 2019. Currently, 20 African countries are at high risk of debt distress or already in distress, raising alarms for economic stability.
Coordinating Minister for the Economy, Wale Edun, praised the creation of DeMFA as a necessary step to address Africa’s unique debt challenges.
“DeMFA should evolve into a platform that delivers innovative tools for managing public debt sustainably,” said Edun, represented by Debt Management Office Director General Patience Oniha. “The goal is to avoid a recurring cycle of debt crises among African nations.”
Urama emphasized the need for Africa to rethink its approach to debt, focusing on productivity rather than sustainability alone. He advocated for pro-innovation reforms, strategic fiscal buffers, and an African Credit Rating Agency to address bias in sovereign ratings.
“Debt can be a driver of economic transformation if invested strategically,” he said. “Through policies like local content and value chain investments, Africa can unlock growth and job creation.”
The newly launched DeMFA is expected to serve as a hub for policymakers, debt managers, and development partners to share solutions for sustainable debt management across the continent.
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