Debt financing costs $74b across Africa, Nigeria reels under N100tr loan
By Jeph Ajobaju, Chief Copy Editor
Implication of Africa’s rising debt servicing, now $74 billion, has been highlighted by the African Development Bank (AfDB), with Nigeria poised to obtain another $1.65 billion World Bank loan in 2025, according to the bank’s website.
Africa’s debt totalled $1.3 trillion in 2023.
Nigeria alone is reeling under a debt of more than N100 trillion.
And with that, the AfDB said Nigeria and other African countries would require an average of $10 billion a year to service debt between 2025 and 2033.
The AfDB sounded the warning at the launch of the Debt Management Forum for Africa (DeMFA) in Abuja, where it stressed the need to adopt debt policies that promote sustainable growth and economic transformation.
Nigeria already owes a debt of over N100 trillion which is projected to reach N138 trillion going by recent loan requests.
The event in Abuja was AfDB’s inaugural policy dialogue on “Making Debt Work for Africa: policies, practices, and options”.
AfDB Vice President and Chief Economist, Kevin Urama, reiterated that Africa’s debt has grown 170 per cent since 2010, and debt financing would reach $74 billion in 2024 with private creditors accounting for 54 per cent.
“This shift toward private debt ownership presents both opportunities and challenges, with African nations paying up to 500 per cent more in borrowing costs from private markets compared to multilateral development banks like the AfDB and the World Bank,” he said.
“Africa’s debt service costs have however risen sharply, diverting resources away from infrastructure investment, thus constraining future GDP growth and economic transformation.
“For 49 African countries, average debt service cost rose sharply from an average of 8.4 per cent of GDP in 2015-19 to 12.7 per cent in 2020-22.”
Wale Edun, Finance Minister and Coordinating Minister of the Economy, commended the establishment of DeMFA, stressing its significance in addressing the unique debt management needs of the 54 countries in Africa.
He noted that DeMFA is now an innovative platform to deliver solutions beyond existing debt management practices in light of Africa’s growing debt distress.
Read also:
Sacked CCT Chairman refuses to quit, tussles for job with Tinubu’s appointee
Customs impounds 9 trucks of smuggled rice at Nigerian-Benin border