At last year’s Group of 20 (G20) summit in Johannesburg, the first to be held in Africa, the continent’s prosperity was at the top of the agenda. Therefore, Africa’s growing debt crisis featured prominently. Currently, many countries on the continent are stuck in a vicious cycle. Cross-border shocks and domestic economic challenges have led to increased spending despite low revenues, and higher interest rates and lower credit ratings have led to increased borrowing.
But that’s just the beginning. When money is paid to service this debt, it can be diverted from stimulating social services and economic activity, leading to fewer jobs, lower tax revenues, and slower growth. In 2026, borrowing will continue to rise across the continent, and the impact of the debt crisis on people’s lives will grow accordingly. So what is the debt situation across Africa? What can be done to address it? Part of the answer may lie in the G20, with the African Union being a core member, but another part may lie in their own strategies.
Understanding sub-Saharan Africa’s debt crisis
The situation in this region is, in a word, alarming. Currently, 22 low-income countries in sub-Saharan Africa are in debt crisis or at high risk of debt crisis, as designated by the World Bank. This assessment is based on a variety of structural and economic factors and measures a country’s debt carrying capacity and debt burden indicators against country-specific standards.
But debt is not an abstract concept, and countries that struggle to service their debts will face consequences beyond the scorn of foreign creditors. When a country stops making payments, its reputation in global financial markets takes a hit. High debt can inhibit new investment and economic growth, a phenomenon known as debt overhang. In such cases, creditors lose confidence in the country’s ability to repay its debt in full, making it difficult to raise new affordable funds.
At the same time, reliance on borrowing leads to dependence on rating agencies that view African countries as much riskier than local or regional credit agencies suggest. This can cause country ratings to plummet during difficult times, making it more difficult for countries to access financing even if the economy recovers. In other words, African countries’ heavy debt burdens are associated with lower sovereign credit ratings, which increases borrowing costs and creates a vicious cycle that makes it difficult for countries to foster the growth needed to reduce debt in the long run. Today, African countries often face interest rates in excess of 10%, while many G7 countries borrow at interest rates closer to 2-3%.
Why is this debt important?
There are two reasons why Africa’s debt has received particular attention from the international community. The first is that most of Africa’s debt is external. That’s right, countries like Japan and the United States maintain much higher debt-to-GDP ratios than Sudan, Guinea, and Malawi. But with debt denominated in foreign currencies, African governments are forced to spend much more to service their debts if exchange rates fluctuate and domestic currencies depreciate. In contrast, a weaker U.S. dollar could give countries breathing room as their currencies appreciate in value relative to the U.S. dollar.
The external nature of African debt also makes restructuring difficult. Although China is at the forefront as a creditor to African countries, its selective participation in international debt relief efforts complicates coordinated efforts at reconstruction and reduces the effectiveness of the Paris Club process. African countries also saw debt held by private creditors increase by nearly 15% from 2010 to 2021, faster than in other developing regions, adding more disparate actors to coordination efforts and further complicating efforts to reach restructuring agreements.
A second reason to be cautious is that many countries in debt crises are classified as low-income or lower-middle-income countries. This is a big challenge. Low-income countries are designated as such by the World Bank because their gross national income is below a certain threshold. Low incomes reduce the ability to finance social services and infrastructure, and are particularly harmful for countries that are already financially constrained by high debt levels, limiting their ability to provide services to their citizens. In fact, according to the United Nations Conference on Trade and Development, in 2023 more than half of sub-Saharan Africa’s population will live in countries that spend more on interest payments than on education or health care.
The influence and limitations of the global community
Let’s go back to Johannesburg for a moment. As a high-level meeting body, the G20 primarily engages in agenda-setting through awareness and rhetoric regarding the debt conversation. At the last summit in late November 2025, host South Africa highlighted debt sustainability as one of its four core priorities, and that focus is reflected in the G20 Leaders’ Declaration. By elevating this concept to the global stage, the G20 has pushed debt to the top of its agenda.
Furthermore, the G20 has considerable convening power. Through the G20 Africa High-Level Dialogue on Debt Sustainability, held two weeks before the G20 Summit, the G20 brought together finance ministers, central bank governors and African Union officials to identify practical solutions to excessive debt burdens. Additionally, the African Debt Expert Panel, comprised of senior African economic and financial leaders, has produced a report on new debt refinancing initiatives and borrower clubs for indebted countries.
The G20 can also take action through concrete measures and important commitments, but this has proven to be the exception rather than the rule. For example, in May 2020, the G20 implemented the Debt Service Suspension Initiative (DSSI), suspending $12.9 billion in debt payments to eligible countries to allow governments to focus resources on saving lives and quickly adapting to the COVID-19 pandemic. Of the 73 low-income countries eligible for the moratorium, only 48 had joined the initiative by the time it expired in December 2021, representing just a quarter of the debt the G20 had originally pledged to suspend.
Following the DSSI, the G20 established a common framework for debt treatment aimed at providing coordinated debt relief to countries facing unsustainable debt by bringing together official bilateral creditors and requiring comparable treatment from private creditors. The initiative recognizes the changing landscape of creditors beyond the Paris Club and brings them together into a so-called “Official Creditors Committee” in advance of negotiations with private creditors. However, so far only four countries have requested debt relief under this framework. And it has been heavily criticized for its slow pace, procedural complexity, inadequate debt relief, and preference for debt reprofiling over outright reduction.
The Common Framework for Debt Resolution calls for urgent reform to take into account the mismatch between long restructuring schedules and the urgent need for immediate financing, as well as China’s role in debt negotiations. Addressing long-term debt sustainability requires shifting the focus from debt levels alone to the structural features of domestic economies and the international financial system that transform manageable debt into crises.
Last year’s G20 summit broadly recognized the deepening debt crisis and was a step in the right direction, but debt commitments remained largely rhetorical. Much has been said about this issue, but taking actionable steps has proven difficult. With limited enforcement mechanisms and reliance on consensus, the G20 is only as strong as the collective commitment behind it, and many observers were disappointed by the lack of reform in the G20’s own processes.
Debt relief requires growth and unique strategies
Dealing with the debt crisis requires more than just cutting spending. After all, it is almost impossible to reduce debt through austerity measures alone. The G20, led by the African Union, must prioritize growth for countries facing debt crises, and the first step to this is economic diversification.
As shown in the graph below, many countries in debt crisis are already struggling to sustain economic growth due to high levels of commodity dependence. Although exports of primary products are not inherently detrimental to growth, dependence on exports of energy, agricultural products, and mining exposes economies to volatile international prices that are outside of national control. When prices rise, income increases. However, when the economy is in a downturn, growth slows and, in the worst case scenario, the economy may fall into recession. This dynamic lasted from 2013 to 2017, when falling commodity prices caused economic slowdowns in 64 commodity-dependent countries. For countries already in debt crisis, stimulating growth at the very moment of declining revenues poses a particularly acute challenge.
For example, a country like the Republic of the Congo, where 94% of exports are goods, is exposed not only to exchange rate fluctuations but also to commodity price shocks that undermine stable growth, complicating debt servicing.
Efforts are also being made to address the economic extractivism that plagues African countries by moving towards domestic processing and reducing dependence on raw material exports. This is especially true as debt servicing costs are rising faster than countries’ ability to earn foreign currency.
Against this backdrop, African leaders continue to face politically unpopular choices such as austerity measures and tax increases, decisions that risk deepening domestic discontent in an already difficult economic climate. However, continental and regional institutions are beginning to advance strategies to foster growth, create wealth, and create a financial architecture better suited to a rapidly developing continent.
African countries are not poor, and they are far from monolithic. Across the continent, countries continue to grapple with their own political, economic, and social dynamics. However, immense potential exists in human capital, natural resources, and infrastructure. The solution to Africa’s debt crisis lies in global and regional cooperation, as debt outpaces growth and shrinking fiscal space threatens progress. The G20 must support the African Union in helping countries manage and repay their debts, and listen to their own strategies on credit ratings and growth promotion to ensure a more stable and prosperous future.
Development needs remain urgent, and underfunding of health, education and social services continues to impact people’s daily lives. The global debt system must move away from prioritizing wealthy financial institutions over the development and well-being of its people. As African governments and regional institutions continue their efforts to reduce heavy debt burdens and foster sustainable growth, the international community must listen and act on reforms and recommendations emerging from Africa to ensure countries are not forced to choose between reckoning with the past and investing in a better future.
Juliet Lancey is a consultant and former Young International Expert at the Atlantic Council GeoEconomics Center.
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Image: A street in the capital with solar street lights installed on April 20, 2016 in Ouagadougou, Burkina Faso. Photo by Nicolas Remene/Le Pictorium, via Reuters.
