Mounting fiscal strain, tightening public budgets, and growing street-level discontent are increasingly shaping political life across several African states. From subsidy removals to cuts in social spending, governments facing heavy repayment schedules have turned to austerity measures, triggering protests, labor unrest, and sharper scrutiny of democratic institutions. These developments are rooted in a steep rise in sovereign debt.
Over the past decade, Africa’s public borrowing has expanded rapidly. According to the International Monetary Fund (IMF), more than half of low-income countries are now either in debt distress or at high risk of it. Debt-servicing costs have climbed further amid global interest rate hikes driven by monetary tightening in the United States and Europe.
Africa’s public borrowing has expanded rapidly. More than half of low-income countries are now either in debt distress or at high risk of it
The World Bank Group reported that developing countries paid a record $443.5 billion in external debt service in 2022, with Sub-Saharan Africa experiencing some of the sharpest increases.
Within this broader context, Oxfam International published Resisting the Rule of the Rich in January 2026, a report on global wealth inequality. The organization argues that widening inequality and escalating public debt are intensifying pressures on democratic systems worldwide. It notes that many lower-income countries, particularly in Africa, are implementing austerity measures to meet mounting debt obligations, narrowing fiscal space for health, education, and social protection while driving public frustration.
The Scale of Africa’s Debt Challenge
The acceleration of African public debt since 2020 has reshaped fiscal policy debates and altered political calculations in capitals across the continent. The shock of the COVID-19 pandemic forced governments to expand spending on healthcare, social protection, and economic stimulus at the very moment that export earnings were falling and currencies were weakening. Subsequently, as global interest rates climbed, refinancing costs rose sharply.
According to the IMF’s Regional Economic Outlook for Sub-Saharan Africa, average public debt in the region increased from roughly 60 to 70 percent of GDP from 2019 to 2023, underscoring the scale and speed of the shift. Several countries have since moved from strain to default or formal restructuring. In 2020, Zambia became the first African state to default during the pandemic, missing a Eurobond payment as foreign reserves dwindled. In 2023, Lusaka reached a restructuring agreement under the G20 Common Framework, which includes China and members of the Paris Club, covering $6.3 billion in debt.
News reports indicated that protracted negotiations with private bondholders focusing on maturity extensions and interest rate reductions continued into 2024 before a deal was finalized. In Ghana, mounting financial pressures culminated in a default on most of the country’s external debt in 2022. The IMF approved a $3 billion Extended Credit Facility in May 2023, tied to fiscal consolidation and a comprehensive domestic debt exchange. The program required substantial participation from domestic bondholders and parallel negotiations with bilateral lenders, including China. Ethiopia also sought relief under the G20 Common Framework in 2021, suspending payments on its Eurobond obligations in 2023. According to reports, restructuring discussions have been complicated by disagreements between official creditors and private investors.
Across these cases, debt relief is accompanied by austerity measures, tax increases, subsidy cuts, and limits on public-sector recruitment, as governments attempt to restore fiscal credibility. In Kenya, proposed tax rises under the 2024 Finance Bill triggered nationwide protests. Demonstrators cited a rising cost of living and frustration with debt-driven austerity as central grievances, reflecting how sovereign debt pressures are increasingly spilling over into the political arena.
Key Creditors and Financial Actors
Africa’s sovereign debt profile has evolved into a complex web of multilateral institutions, bilateral partners, and private investors, each shaping fiscal outcomes and reform trajectories. Together, these actors now define not only repayment schedules but also domestic economic policy, with implications for political stability.
Key creditors and financial actors define not only repayment schedules but also domestic economic policy, with implications for political stability
At the center of the multilateral system are the IMF and the World Bank Group, which remain pivotal in stabilization and reform programs across heavily indebted African economies. IMF arrangements typically require governments to undertake fiscal consolidation measures designed to restore macroeconomic stability. These often include revenue mobilization drives, subsidy rationalization, and public financial management reforms. In Ghana, for example, an IMF-supported program aimed at reducing the fiscal deficit from above 10 to below 5 per cent of GDP by 2025 also included debt restructuring and structural reforms. Parallel World Bank budget support has been tied to energy-sector restructuring and governance reforms, thereby embedding conditionality directly into domestic policy frameworks.
Beyond the multilateral sphere, bilateral creditors, traditionally coordinated through the Paris Club, continue to influence restructuring outcomes. The Paris Club’s role has expanded under the G20 Common Framework, which seeks to bring both traditional Western lenders and newer creditors such as China into a unified debt treatment process. Yet coordination has proven difficult due to prolonged disagreements over burden sharing between Chinese and Western lenders. In Zambia’s restructuring negotiations, for example, the holdup has contributed to delays of more than two years.
China’s presence has transformed the bilateral landscape. According to data from the China Africa Research Initiative, state-owned Chinese policy banks, notably the Export-Import Bank of China and the China Development Bank, extended more than $170 billion in loans to African governments and state-owned enterprises between 2000 and 2020. Much of this financing was offered under the Belt and Road Initiative to fund roads, railways, and power projects. While these investments have addressed infrastructure deficits, repayment obligations have added to external debt pressures. Reports indicate that Beijing has tended to favor bilateral negotiations and maturity extensions over outright debt write-offs during restructuring talks.
Private creditors represent the third major pillar. During the 2010s, African sovereigns increasingly accessed international capital markets through dollar-denominated Eurobonds, capitalizing on low global interest rates. Ghana, Kenya, Senegal, and Nigeria issued multiple bonds. However, as global interest rates climbed sharply in 2022 and 2023, Eurobond yields surged, and market access narrowed. Governments faced higher refinancing costs, in some cases turning to more costly domestic borrowing.
In restructuring processes, private bondholders, often organized into ad hoc committees advised by major financial firms, have become decisive actors, negotiating terms that directly affect fiscal policy direction. Together, these creditors form an intricate financial ecosystem whose decisions reverberate far beyond balance sheets, shaping economic governance across the continent.
Geopolitical Shifts in Lending Patterns
Historically, African sovereign borrowing relied heavily on concessional loans from multilateral institutions and bilateral partners. After debt relief initiatives such as the Heavily Indebted Poor Countries Initiative in the 2000s, many countries saw debt ratios decline. The low-interest-rate environment after the 2008 financial crisis encouraged a shift toward commercial borrowing, as Eurobond issuance expanded rapidly between 2010 and 2019. This diversification reduced reliance on traditional donors but increased exposure to market volatility and currency risk.
Over the past decade, Africa’s creditor profile has shifted. While Western governments and multilateral institutions remain influential, China’s role in infrastructure financing has expanded significantly. By 2022, Chinese lending accounted for roughly 12 per cent of Africa’s external public debt, making it the largest bilateral creditor.
By 2022, Chinese lending accounted for roughly 12 per cent of Africa’s external public debt, making it the largest bilateral creditor
However, private bondholders collectively hold an even larger share. The shift has altered diplomatic dynamics as debtor governments must now negotiate simultaneously with Beijing, the Paris Club, and private investors. This multipolar creditor environment has affected bargaining power and timelines. For example, Zambia’s restructuring required agreement from China, France, the United Kingdom, and private bondholders, each operating under different mandates.
Moreover, the complexity of creditor composition has made debt workouts slower and more politically sensitive. Each creditor group has distinct incentives and legal frameworks, complicating efforts to reach comprehensive agreements. At the same time, Western governments have increased scrutiny of Chinese lending practices, while China has called for multilateral institutions and private creditors to share the burden of relief.
Democratic Governance Under Strain
Africa’s rising public debt is not solely an economic issue. It has become a central political and governance challenge. A more complex creditor landscape, higher global interest rates, and constrained fiscal space have combined to make debt management more difficult. While multilateral institutions, bilateral lenders, and private creditors remain essential sources of financing, their interactions increasingly shape domestic policy choices.
Debt-driven fiscal tightening has exacerbated political pressures in several countries. Rising living costs, subsidy reforms, and new taxes have triggered protests in Kenya, Ghana, and Nigeria. According to a 2025 Freedom House report, Sub-Saharan Africa has experienced a continued decline in political rights and civil liberties over the past few years. While causes vary, economic grievances and fiscal constraints have featured prominently in protest movements.
Governments facing limited fiscal space may prioritize debt service to maintain market access and creditor confidence, in many cases reducing allocations for social provision. Moreover, the World Bank has warned that high debt service burdens can crowd out development expenditure.
As restructuring processes continue in Zambia, Ghana, and Ethiopia, global finance is reshaping the balance between fiscal adjustment and social stability. As governments trade fiscal tightening for debt relief, policy choices become increasingly constrained. In this context, debt increasingly operates as a structural constraint on domestic policy autonomy, threatening the legitimacy of the democratic process.
The trajectory of Africa’s debt problem depends on global financial conditions, creditor coordination, and domestic policy decisions. It is likely, however, that as long as debt negotiations remain compartmentalized from their social and political consequences, a holistic approach to African debt relief will remain illusory.
It is likely that as long as debt negotiations remain compartmentalized from their social and political consequences, a holistic approach to African debt relief will remain illusory
