Africa’s debt trap: Why the IMF numbers tell only half the story

The scale of the problem is stark. According to IMF assessments cited by the United Nations Development Programme UNDP, the average total public debt ratio in sub-Saharan Africa nearly doubled in just a decade — from 30% of GDP at the end of 2013 to close to 60% by end-2024. Over the same period, the ratio of interest payments to government revenue more than doubled. And that is the metric that stings most, because it measures not what governments owe in the abstract, but what slice of every tax dollar collected is immediately rerouted to creditors rather than citizens.

What the headline figures conceal

In April 2024, the IMF Africa Department director announced that median public debt in sub-Saharan Africa was stabilising at around 60% of GDP — a development he called “good news,” noting that it halted a decade-long upward trend. The statement was technically accurate. It was also dangerously partial.

Stabilisation, in the context of African debt, does not mean relief. It means countries are, at great cost, just barely treading water. The Afreximbank Research Group, drawing on IMF data, noted that Africa’s aggregate debt-to-GDP ratio surged by 39.3 percentage points between 2008 and 2020 before declining slightly to 68.6% of GDP in 2023. The debt load was last seen at similar levels 25 years ago — a period that required two separate rounds of international debt relief under the Heavily Indebted Poor Countries Initiative HIPC and the Multilateral Debt Relief Initiative MDRI.

Even the projected improvement carries a shadow. IMF forecasts show Africa’s debt-to-GDP ratio declining further to around 63.5% by 2028 — but those projections assume robust growth, favourable inflation dynamics, and no new major shocks. Given that three consecutive external crises — the 2008 global financial crisis, the COVID-19 pandemic, and the war in Ukraine — have repeatedly derailed Africa’s fiscal path, betting on uninterrupted benign conditions is a significant assumption.

The human cost hiding behind the ratios

Debt-to-GDP ratios are a convenient abstraction. Budgets are not. In 2024, African countries paid approximately USD 74 billion in total debt service payments — more than four times the USD 17 billion paid in 2010, according to data cited by the think tank ThinkGlobalHealth. Of that amount, USD 40 billion flowed to private creditors alone. In more than 40% of African countries, debt service payments now exceed or rival public spending on health or education.

A Heinrich Böll Stiftung analysis published in 2025 found that 25 African countries are currently spending more on debt than on education, and 32 are spending more on debt than on healthcare. Total external debt service reached USD 163 billion in 2024 — up from USD 61 billion in 2010 — according to the African Development Bank. Angola, which allocates 66% of government revenue to debt repayments — the highest share on the continent — has seen spending on health and education collapse by more than 55% since 2015.

A report commissioned jointly by the Vatican Pontifical Academy of Social Sciences and Columbia University Initiative for Policy Dialogue found that between 2012 and 2022, 46 developing countries spent more on debt interest than on healthcare, up from 36 a decade prior. Among those 46, the majority of the low-income and lower-middle-income countries were in sub-Saharan Africa. The UN Secretary-General stated plainly that Africa now spends more on debt service costs than on healthcare — while noting that of the USD 650 billion in Special Drawing Rights SDR allocated by the IMF in 2021, Africa received only USD 34 billion, barely 5%, even as European Union countries with half the population received USD 160 billion.

The other half of the story: What leaves Africa unseen

The IMF debt sustainability frameworks are built on the inputs that governments report and the projections that models project. They largely do not account for what leaves Africa through channels that never appear in official budgets at all.

According to the United Nations Conference on Trade and Development UNCTAD 2020 estimates — widely regarded as conservative — approximately USD 89 billion leaves Africa annually as illicit financial flows, roughly equivalent to 3.7% of the continent’s GDP. The Open Society Foundations estimates that African economies have lost between USD 597 billion and USD 1.4 trillion in illicit flows over the past three decades alone — a figure approaching the continent’s entire current gross domestic product. Approximately 65% of these flows originate from multinational corporations through trade misinvoicing, transfer mispricing, and unequal contracts.

The UN Office of the Special Adviser on Africa estimated that Africa loses USD 88.6 billion in illicit financial flows annually, with an additional USD 70 billion disappearing into inefficient public expenditures and USD 46 billion lost through tax redundancies and missed policy action. Meanwhile, USD 100 billion in annual remittances, USD 1.3 trillion in African pension funds largely invested abroad, and between USD 100 billion and USD 200 billion in potential carbon market revenue represent resources the continent could theoretically leverage but largely cannot, because of structural constraints that IMF debt models were not designed to address.

The Tax Justice Network Africa has noted that debt service is projected to average 12% of government spending across the continent — higher than average allocations to healthcare, education, social protection, and public services combined. When you build a fiscal model on revenues depleted by illicit outflows and then add debt service costs that dwarf public investment, the ratio of debt-to-GDP tells you almost nothing useful about whether the underlying economy can breathe.

The creditor shift nobody is talking about loudly enough

Another dimension absent from the standard IMF summary is the radical transformation in who Africa’s creditors actually are. For most of the post-independence era, African external debt was predominantly owed to official creditors — high-income governments through institutions like the Paris Club, and multilateral lenders such as the World Bank and IMF, with concessional rates and long repayment horizons built in.

That landscape has changed fundamentally. Private debt as a share of Africa’s total external debt climbed from 18.8% of GDP in 2008 to 41.6% in 2023, according to the Afreximbank Research Group. By 2023, private creditors held 54.3% of Africa’s total external debt, outpacing both bilateral creditors at 18.7% and multilateral creditors at 27.1%. This means the majority of Africa’s external debt is now held by commercial bondholders and private lenders who have no institutional mandate for concessional terms, debt standstills, or development-aligned restructuring.

For many African governments, this shift has been catastrophic in practical terms. When COVID-19 hit and economies collapsed, the IMF Debt Service Suspension Initiative offered temporary relief only from official bilateral creditors. Private creditors largely refused to participate. Countries that needed to pause payments to survive the pandemic found themselves facing downgrades, market exclusion, and the threat of legal action from bondholders sitting in financial centres thousands of miles away.

The IMF optimism bias problem

Research published by the European University Institute found that IMF and World Bank debt forecasts for African countries showed significant systematic optimism bias — on average underestimating the debt-to-GDP trajectory by 10 percentage points after five years of projection. The primary drivers were overestimated fiscal revenues and overestimated GDP growth. The study noted that larger countries tend to be more affected by these positive biases, and that the institutional incentive to declare debt as “sustainable” — given that the IMF and World Bank cannot lend to countries with officially unsustainable debt — creates structural pressure toward favourable interpretations of ambiguous data.

This is not a minor technical complaint. If the forecasting frameworks that govern debt relief eligibility, program design, and market access systematically understate how bad the debt problem is, then decisions made on that foundation — by creditors, by bond markets, and by African governments themselves — will consistently misallocate resources. Countries will be declared out of distress before they are, and structural reforms will be prescribed on the assumption that growth trajectories are healthier than they are in reality.

Africa pushes back — with mixed results

None of this is news to African policymakers, who have spent the past decade building a more unified continental response. In May 2025, the African Union AU held its first-ever Debt Conference in Lomé, Togo, where leaders adopted the Lomé Declaration, demanding time-bound debt restructuring negotiations, suspension of debt servicing during restructuring processes, and the inclusion of middle-income countries — many of which were excluded from HIPC relief in the 1990s and find themselves excluded again from the G20 Common Framework today.

The AU push for a Common African Position on Debt — negotiating collectively rather than country by country — represents a meaningful strategic shift. For decades, African governments have entered restructuring negotiations alone, under fiscal duress, with limited leverage and no unified voice. The shift toward a coordinated G20 posture, backed by the AU full membership status, could begin to change the power dynamics that have historically left African borrowers with few choices and worse outcomes.

Domestically, African economists and policymakers have also grown more vocal about the long-term necessity of reducing reliance on external debt entirely. The AU Commissioner for Economic Development has argued that Africa needs to mobilise 75% of its development resources domestically and raise investment from 20% to 40% of GDP — a target that requires, among other things, closing the illicit financial flow channels that drain the revenue base year after year.

The real question the IMF should be asking

The IMF is not the villain in this story — that framing is too simple and too convenient for everyone involved. The Fund provides liquidity when private markets shut out distressed borrowers. Its technical assistance programmes have helped stabilise currencies, contain inflation, and rebuild fiscal buffers in dozens of countries. None of that is nothing.

But the IMF debt sustainability framework was built for a different world — one in which most African debt was official, concessional, long-term, and renegotiable within established multilateral channels. The world has changed. Private creditors now hold the majority of Africa’s external debt. Climate shocks are accelerating. The fiscal base is being eroded by illicit outflows that dwarf official aid inflows. And the IMF headline debt-to-GDP ratios are, too often, the only number anyone reads.

What is needed is not an abandonment of fiscal discipline — it is a reckoning with the full picture. That means debt sustainability frameworks that account for illicit financial flows as a structural fiscal constraint. It means creditor burden-sharing architectures that bind private bondholders, not just official lenders. It means optimism-proofed growth projections and genuine debt relief rather than euphemistically labelled “restructuring” that simply extends the timeline of pain.

The IMF numbers are not wrong. They are just radically insufficient. And in the gap between what they capture and what they leave out, 1.4 billion people are trying to build a future on increasingly shaky ground. That is the other half of the story — and it is well past time for it to be told in full.

This article reflects the views of the editorial analysis desk and is based on publicly available data from the IMF, World Bank, UNDP, UNCTAD, Afreximbank Research, African Development Bank, and the United Nations Office of the Special Adviser on Africa. All figures reflect the most recently available data as of publication.