In the complex landscape of global economics, one figure stands out as a glaring concern- $1.8 trillion.
This astronomical sum represents the staggering amount of public debt owed by African nations in 2022. As the African continent struggles with this ever-increasing financial burden, it becomes necessary to analyze the trend, explore its drivers, and shed light on the debt dynamics that have brought many nations to this point.
Amount Owed to China at the end of 2021, the countries with the highest external debt to China were:
– Pakistan: $27.4 billion
– Angola: $22.0 billion
– Ethiopia: $7.4 billion
– Kenya: $7.4 billion
– Sri Lanka: $7.2 billion
As of the end of 2021, the countries with the highest debt to China were Pakistan, Angola, Ethiopia, Kenya, and Sri Lanka, as mentioned above.
These countries had accumulated significant external debt owed to China due to various infrastructure projects and loans.The rise of Africa’s public debt has been nothing short of meteoric.
Over the past decade, African countries have witnessed a 183% increase in their public debt levels, a rate approximately four times higher than the growth rate of their GDP in dollar terms.
Africa’s external debt has also witnessed a significant increase, rising from approximately 19% of GDP in 2010 to nearly 29% in 2022. Simultaneously, the external debt as a share of exports has risen from 74.5% to 140% over the same period.
The cost of servicing this debt has increased significantly. The average cost of financing in Africa is approximately 11.6%, a rate significantly higher (8.5 percentage points) than the risk-free rate of the US benchmark.
