By Uche Usim
Africa’s external debt burden is increasingly defined by concentration at the top and vulnerability at the bottom, with just 10 countries accounting for a combined $543.58 billion in foreign obligations as of 2025.
According to the latest figures from the World Bank and the International Monetary Fund, the continent’s debt exposure remains heavily skewed toward a few large economies, even as smaller nations grapple with disproportionately high repayment pressures.
At the centre of the debt stack are South Africa and Egypt, which together account for 60.85 per cent of the total debt among the listed countries. South Africa leads with $200.31 billion, while Egypt follows with $163.91 billion, figures that reflect both their economic scale and sustained access to international credit markets.
Nigeria ranks third with $51.86 billion in external debt, highlighting its continued reliance on foreign borrowing to support fiscal operations and shore up foreign exchange reserves amid persistent revenue constraints.
Mid-tier borrowers include Tunisia at $43.31 billion, Tanzania with $35.54 billion, and Ghana at $29.40 billion. These countries have increasingly leaned on multilateral and bilateral funding sources as global financial conditions tighten.
Further down the table, Rwanda holds $13.43 billion, while Mauritius and Botswana carry smaller debt loads of $2.14 billion and $2.05 billion respectively.
At the bottom is Liberia with $1.63 billion in external debt. Yet, despite its relatively low nominal figure, Liberia remains among the most constrained when debt is measured against economic output. Its external obligations amount to 31.21 per cent of GDP, underscoring structural weaknesses tied to a narrow export base and limited fiscal space.
Analysts note that while large economies dominate in absolute terms, the real pressure points are often found in smaller countries where debt servicing consumes a larger share of national income.
Rwanda and Tunisia, in particular, stand out as economies where debt-to-GDP ratios signal heightened vulnerability.
The data highlights a widening “debt divide” across Africa, where scale masks risk at the top, and smaller economies face sharper trade-offs between growth, stability and debt sustainability as global borrowing costs remain elevated.
Just last week, the Chairman of the Alliance for Economic Research and Ethics LTD/GTE, Dele Oye, raised the alarm over Nigeria’s accelerating debt profile, warning that borrowing under President Bola Tinubu has surpassed historic levels within a remarkably short period.
Oye said the current administration has accumulated N65.9 trillion in public debt in just 24 months, more than five times the N12 trillion Nigeria incurred in its first 55 years after independence.
The former chairman of the Organised Private Sector of Nigeria (OPSN) noted that while debt built up gradually over decades, the recent pace signals a structural fiscal strain. Nigeria’s total public debt stood at N159.28 trillion as of April 2026, according to the Debt Management Office, translating to an estimated N670,000 per citizen.
He warned that without urgent reforms to boost revenue and enforce fiscal discipline, the country risks long-term pressure on public finances and reduced capacity to fund critical sectors.
Drawing a historical contrast, Oye recalled that Nigeria briefly became externally debt-free in 2006 under former President Olusegun Obasanjo after paying $12 billion to clear $30 billion owed to the Paris Club. He described the period as a “golden moment” that now appears distant.
According to him, debt rose to ₦12.06 trillion by 2015 under Goodluck Jonathan, before surging to ₦87.38 trillion during the administration of Muhammadu Buhari. He noted that part of this increase stemmed from the securitisation of ₦23.7 trillion in Central Bank “Ways and Means” advances.
Oye cautioned against relying solely on Nigeria’s debt-to-GDP ratio, currently at 35.5 per cent, which remains below the International Monetary Fund threshold of 55 per cent. Instead, he pointed to the debt service-to-revenue ratio as a more critical indicator.
Citing data from the Nigerian Economic Summit Group, he said the ratio stood at 116.8 per cent in 2024 and 113 per cent in the first quarter of 2025, meaning government earnings are insufficient to cover debt obligations. In January 2025 alone, debt servicing reached ₦696.27 billion, exceeding retained revenue of ₦483.47 billion.
He attributed the imbalance to Nigeria’s weak revenue base, noting that the country’s tax-to-GDP ratio of 8.2 per cent is among the lowest in Africa, compared to higher levels in peer economies.
Oye further highlighted that the 2026 budget of ₦68.32 trillion allocates ₦15.8 trillion to debt servicing—more than spending on key sectors combined—while the projected ₦25.3 trillion deficit breaches statutory limits.
Despite the outlook, he said Nigeria has the capacity to reverse course through tax reforms, stricter fiscal rules, debt restructuring and improved revenue mobilisation, stressing that the real challenge is political will.
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