Who Owns Africa’s Debt? Inside Africa Debt Crisis

The numbers tell a story of crisis. Africa’s public debt has surged past $1.8 trillion, more than quadrupling since the early 2000s. Twenty-two low-income countries across Sub-Saharan Africa now stand in or at high risk of debt distress, according to the World Bank. For millions of Africans, this debt crisis translates directly into deteriorating public services, vanishing jobs and diminishing hopes for the future.

As governments divert scarce resources to service mounting debt obligations, the human toll becomes starkly visible. In South Sudan, where civil war has left millions facing acute hunger, the government spends more than ten times as much on external debt servicing as it does on healthcare. In Malawi, where just 15% of children complete secondary school, twice as much money flows to debt payments as to education.

“The scale of this inequality between Africans and the rest of the world is so great that I am not sure the world will ever forgive us for failing to deliver urgent debt restructuring,” warned analysts in a recent Christian Aid report examining the continent’s worst debt crisis in a generation.

The Anatomy of Africa’s Debt Mountain

Understanding who owns Africa’s debt reveals a fundamental shift in the continent’s financial landscape. Unlike previous decades when multilateral institutions and Paris Club countries dominated lending, today’s creditor base has dramatically diversified — and with it, the complexity of finding solutions.

Private creditors now hold more than 43% of Africa’s external debt, totaling approximately $775 billion, according to data from the World Bank’s International Debt Statistics. Multilateral institutions account for 34%, while bilateral creditors — led by China — hold 23% of the continent’s external obligations.

This fragmentation of debt ownership creates what analysts call a “coordination nightmare” when countries need restructuring. Private bondholders, multilateral development banks, China, traditional Paris Club lenders and new creditors from the Gulf states all have different interests, different legal frameworks and different appetites for taking losses.

The African Development Bank reports that Africa’s public debt increased by nearly 170% between 2010 and 2024, with debt-service obligations projected to exceed $100 billion in 2026. These payments will remain above $60 billion annually through 2030, creating what economists describe as a “structural drag” on development spending.

China’s Evolving Role as Africa’s Largest Bilateral Lender

China has emerged as Africa’s dominant bilateral creditor, a position that fundamentally reshapes debt negotiations across the continent. Chinese public lenders hold nearly $62 billion of Africa’s external debt, while Chinese private lenders account for an additional $23 billion, making China by far the largest bilateral lender to the continent.

Between 2000 and 2023, Chinese financial institutions extended approximately $182.3 billion in development finance to Africa through the China Development Bank, the Export-Import Bank of China and other commercial lenders, according to Boston University’s Global Development Policy Center. This amount rivals the $209.5 billion committed to Africa by the World Bank during a comparable period.

Yet China’s lending patterns have shifted dramatically. A January 2026 report by the ONE Data initiative found that African countries now transfer more money to China in debt repayments than they receive in new loans — a striking reversal from the lending boom of the 2010s. Chinese loans to Africa averaged just above $2 billion since 2020, down sharply from $10 billion or more annually between 2012 and 2018.

Angola leads African nations with $17.8 billion in debt to China, followed by Ethiopia ($6.5 billion), Egypt ($6.3 billion), Zambia and Kenya ($6 billion each), according to World Bank data. This concentration of Chinese lending in a handful of economies heightens concerns about debt sustainability in countries already struggling with multiple economic shocks.

China’s selective participation in international debt relief efforts has complicated restructuring negotiations, according to the Atlantic Council. While China has engaged with the G20 Common Framework — co-chairing creditor committees for countries like Zambia — its approach differs fundamentally from traditional Paris Club lenders, creating friction in multilateral negotiations.

Private Creditors and the Restructuring Dilemma

The surge in private sector lending to Africa over the past 15 years has fundamentally altered the debt landscape, creating new challenges for countries seeking relief. Since 2010, African nations have seen a nearly 15% increase in debt held by private creditors — a faster rate than any other developing region.

Major institutions including Morgan Stanley, Franklin Templeton and other global asset managers now hold significant stakes in African sovereign bonds. Unlike official creditors bound by G20 political commitments, private bondholders operate under commercial incentives, seeking to maximize recovery or hold out for full repayment.

Ethiopia’s protracted negotiations exemplify these tensions. Private creditors rejected the government’s initial restructuring offer for its $1 billion Eurobond, which included an 18% principal reduction and a 5% interest rate. The bondholders, including institutions controlling more than 45% of the bond, deemed the terms inadequate compared to treatment offered to official creditors.

After years of negotiations, Ethiopia reached a preliminary agreement with bondholders in early January 2026. However, Debt Justice calculated that under the deal’s terms, bondholders would receive 28% more in payments than government creditors — a stark example of what critics call the “holdout problem” in sovereign debt restructurings.

Ghana’s restructuring process, which concluded in 2024 with bondholders accepting a 37% haircut on $13 billion of debt, represents one of the faster resolutions. Yet even this relatively successful case took years of negotiations and required the government to restructure both domestic and external debt simultaneously.

“Private creditors charging sky-high interest rates should never walk away with more than government creditors after debt relief,” said Tim Jones, Policy Director at Debt Justice. “The UK must act now and introduce legislation to prevent any creditor seeking more than other creditors in the courts.”

The IMF and World Bank: Gatekeepers to Restructuring

The International Monetary Fund and World Bank occupy pivotal roles in Africa’s debt crisis, serving simultaneously as creditors, technical advisors and gatekeepers to debt relief. As of January 2026, African countries owe substantial sums to these institutions, with Egypt, Kenya, Tanzania, Ghana and Ethiopia among the continent’s largest IMF debtors.

For countries seeking debt restructuring, IMF approval has become essential. The Fund conducts Debt Sustainability Analysis — jointly with the World Bank — to assess whether a country’s debt burden is sustainable, at high risk or in distress. This assessment determines eligibility for the G20 Common Framework and shapes creditor negotiations.

Yet this system has drawn criticism. Ethiopia’s case illustrates the challenges: despite being among the first countries to request treatment under the Common Framework in 2021, Ethiopia only reached a staff-level agreement with the IMF in March 2024 — nearly three years later. The delay stemmed partly from the IMF’s insistence that Ethiopia obtain formal assurances from all creditor groups before approving a new program.

Recent reports indicate that Kenya saw both the IMF and World Bank freeze loan disbursements in late 2025 after the government failed to meet key reform conditions. The IMF denied Kenya $850.9 million after the country failed to comply with 11 of 16 agreed conditions, while the World Bank suspended a $750 million loan, citing delays in legislative and policy reforms.

Critics argue that IMF and World Bank policies often perpetuate debt cycles rather than resolve them. A January 2025 BORGEN Magazine analysis noted that IMF loans typically come with stringent policy requirements, and many African countries take emergency IMF loans to repay either World Bank debts or commercial obligations.

The Human Cost: Healthcare, Education and Development Sacrificed

Behind the statistics and restructuring negotiations lies a profound human tragedy playing out across the continent. African governments’ external debt service payments reached 18.5% of budget revenues in 2024 — the highest since 1998 and almost four times the 2010 level, according to Christian Aid research.

More than 30 African countries spent more on debt service than on healthcare even before the COVID-19 pandemic, according to data analysis organization ONE. This disparity has only widened as debt burdens have grown. Interest payments in Africa have increased by 132% over the past decade, at the direct expense of spending on education, healthcare and investment, according to the UN Conference on Trade and Development.

The number of African countries where interest payments comprise over 10% of government revenue rose from nine in 2010 to more than 20 in 2022. Each dollar diverted to debt servicing represents one less dollar available for development spending — a zero-sum calculation with devastating real-world consequences.

Kenya exemplifies these pressures. Despite ending its Extended Fund Facility and Extended Credit Facility programs with the IMF in March 2025, the country faces severe fiscal strain from rising debt and revenue challenges. Recent protests erupted over IMF-backed tax hikes linked to a $3.6 billion loan, highlighting the political tensions debt obligations create.

In Uganda, 61% of public debt comes from foreign loans, with the World Bank being the largest lender. By 2022, Uganda owed $4.5 billion to the World Bank alone, contributing to total public debt of $20 billion — equivalent to $400 per person in a country where the average citizen earns far less annually.

Structural Vulnerabilities: Why Africa Pays More

Africa’s debt burden is uniquely onerous not simply because of volume, but due to structural factors that make borrowing more expensive and debt harder to manage. The continent faces interest rates often topping 10%, while Group of Seven countries borrow at rates closer to 2 to 3%, according to Atlantic Council analysis.

Western credit rating agencies — Fitch, Moody’s and Standard & Poor’s — play a crucial role in determining these rates. All three are headquartered in London or New York with only two offices in Africa between them, both in Johannesburg. Critics argue these agencies systematically overstate the risk of lending to African countries.

“Heavier debt loads in African nations are associated with weaker sovereign credit ratings, which in turn raise borrowing costs, creating a cycle that makes it harder for countries to stimulate the growth needed to reduce debt in the long run,” researchers at the Atlantic Council explained.

The external nature of Africa’s debt compounds these challenges. While industrialized countries typically owe more than 70% of their public debt to domestic creditors, African nations owe the majority of their debt to external lenders. Over 70% of Africa’s total public external debt is denominated in U.S. dollars, exposing countries to exchange rate risk.

Commodity dependence further amplifies vulnerability. Many countries in debt distress struggle with high levels of commodity dependence, leaving their economies exposed to volatile international prices largely beyond national control. When commodity prices fell between 2013 and 2017, the impact triggered slowdowns in 64 commodity-dependent countries.

The Mo Ibrahim Foundation emphasizes that Africa’s debt challenges stem primarily from structure rather than volume. “In absolute terms, Africa’s public debt is lower than any other world region but Oceania,” the Foundation notes. “Yet eight of the nine countries listed by the IMF as being in ‘debt-distress’ in 2023 are African.”

The G20 Common Framework: Promise and Frustration

Following the COVID-19 pandemic, the G20 launched the Common Framework for Debt Treatments in 2020, aimed at providing coordinated debt relief for countries facing unsustainable burdens. The initiative brings together official bilateral creditors — including both Paris Club countries and China — before sequential negotiations with private creditors.

Yet implementation has proven painfully slow. Only four countries — Chad, Ethiopia, Ghana and Zambia — formally requested treatment under the Framework, and progress has been glacial. Zambia defaulted in November 2020 but took more than three years to reach agreements with official creditors and Eurobond holders by early 2024.

“The Common Framework has no legal teeth to force private creditors to the table,” noted researchers at the Peterson Institute for International Economics. “It relies entirely on moral suasion and the hope that IMF conditionality will create enough pressure.”

Inter-creditor disputes have repeatedly stalled negotiations. In Zambia’s case, disagreements over “comparable treatment” between China and Western bondholders delayed progress for years. Ghana’s insistence on equal treatment for all creditors, including African multilateral institutions like Afreximbank, sparked fresh disputes.

Ethiopia’s restructuring remains unresolved nearly five years after the country’s initial application in February 2021. Despite reaching agreements with bilateral creditors in mid-2024, negotiations with private bondholders have broken down multiple times over questions of comparability and treatment.

The African Union issued the Lomé Declaration on Debt in May 2025, advocating for reform of the G20 Common Framework with focus on faster relief and stronger methodologies for comparability of treatment. The declaration reflected growing African frustration with a system that many view as favoring creditor interests over debtor nation needs.

Domestic Debt: The Hidden Crisis

While external debt attracts most attention, a less-visible crisis has been building in domestic debt markets. African governments now raise more than half their financing at home, reversing decades of dependence on external lenders, according to new research from the African Debt Database covering more than 50,000 loans and securities issued by 54 African countries.

Since 2010, domestic debt issuance has tripled, rising from about $150 billion to nearly $500 billion. This shift has created concerning dynamics between African governments and their banking sectors. Domestic bank holdings of sovereign debt are growing faster in Sub-Saharan Africa than anywhere else in the world.

“This bank-sovereign nexus creates a vicious potential feedback loop,” warned IMF researchers in their October 2025 Regional Economic Outlook. “Deteriorating sovereign creditworthiness negatively affects the soundness of the banking sector; this could further reduce already limited availability of private credit and therefore growth.”

Ghana and Sri Lanka opted to restructure domestic debt alongside external obligations, with Ghana launching its Domestic Debt Exchange Program in 2022. The move saved 61 billion Ghanaian cedi by extending maturities and lowering interest rates, but also imposed losses on domestic creditors including pension funds.

Zambia chose differently, excluding non-resident holdings of domestic bonds from external restructurings despite significant stocks of such debt. This decision, supported by the IMF out of fears about destabilizing the domestic banking sector, raised serious objections from China and other bilateral creditors who saw it as shifting greater burden onto external lenders.

Paths Forward: Reform Proposals and Regional Solutions

As the debt crisis deepens, economists and policymakers have advanced numerous proposals for systemic reform. The African Union’s permanent seat at the G20, secured in recent years, provides new platforms for continental perspectives in global financial discussions.

At the G20-Africa High-Level Dialogue on Debt Sustainability held before the 2025 Johannesburg Summit, finance ministers and central bank governors identified practical solutions to excessive debt burdens. An Africa Expert Panel on Debt — composed of senior African economic and financial leaders — produced recommendations including a new debt refinancing initiative and a borrower’s club for debtor countries.

Regional strategies offer promise. The Atlantic Council argues that economic diversification must be prioritized, as many countries in debt distress struggle with high commodity dependence. Expanding domestic resource mobilization to reduce dependence on commercial debt markets represents another key priority.

Some 13 African countries have banned raw critical mineral exports to push China and other buyers toward value addition on the continent. Rwanda pursues full-cycle electric vehicle manufacturing through strict tech-transfer agreements, while Zambia and the Democratic Republic of Congo created a cross-border special economic zone to attract EV component manufacturers.

“Without immediate reforms, the world is consigning the poorest in Africa to a century of misery,” warned more than 40 leading economists in an April 2024 open letter coordinated by Power Shift Africa and Earth4All. Their ten-point plan includes immediate debt cancellation, fundamental reform of international financial institutions and restoration of broken climate finance promises.

Looking Ahead: Resilience Amid Uncertainty

Despite the crisis, Africa’s economic growth projections show resilience. The African Development Bank forecasts growth of 4.2% in 2025 and 4.3% in 2026 — 0.3 percentage points higher than earlier estimates. This positive outlook stems from buoyant private consumption, accommodative monetary policy and a weaker U.S. dollar aiding disinflation.

Yet this resilience cannot be taken for granted. The IMF warns that overlapping monetary, financial, external and fiscal vulnerabilities persist across much of Sub-Saharan Africa. Uncertainty remains high and risks tilt toward the downside, particularly given deteriorating global trade and aid landscapes.

Debt-service obligations will exceed $100 billion in 2026 and remain above $60 billion annually through 2030. Most payments arise from bonds — both domestic and international — which carry higher costs and shorter maturities than concessional loans. Countries with large Eurobond exposure face particularly steep repayment cliffs.

The cases of Ghana and Zambia, both emerging from restructuring processes with renewed credit ratings, offer templates for recovery. Ghana secured credit upgrades from Fitch and S&P Global after its $2.8 billion restructuring deal, while Zambia benefited from improved investor sentiment following its agreements with official and private creditors.

“Transformative reform of the international financial system and ambitious debt relief could unlock Africa’s potential for leveraging its resources, capabilities and economies of scale to tackle poverty, restore its food sovereignty, unleash its renewable energy potential, and leapfrog into a century of justice, equity, and sustainable prosperity,” said Fadhel Kaboub, Senior Advisor at Power Shift Africa.

As Africa enters 2026, twenty-two countries remain in or at high risk of debt distress. For them, and for the hundreds of millions of Africans whose futures hang in the balance, the coming years will prove whether the international community can deliver meaningful solutions — or whether the debt crisis will deepen into a development catastrophe.