The cost of borrowing in Africa is increasing, with 27.5% of government revenue going towards debt interest

Key takeaways:

  • Africa now spends 27.5% of revenue on interest payments, nearly 4 times higher than in 2008.
  • The debt burden is rising faster than economic growth as interest payments as a percentage of GDP grew from 5.4% in 2008 to 8.2% in 2024, showing increasing financial strain.
  • Effective interest rates have more than tripled from 1.4% in 2008 to 5.0% in 2024, making debt less affordable.
  • Between 2008 and 2019, the ratio of interest to revenue rose by 12.2 percentage points, and in five years (2019–2024), it surged by another 8.5 percentage points.
  • As borrowing costs rise, the risk of defaults and fiscal crises in African economies grows, making financial stability a concern.
  • More money spent on debt means less for roads, hospitals, and schools, slowing down long-term economic progress.

The cost of borrowing in Africa has reached alarming levels, with 27.5% of government revenue now going towards interest payments, a sharp rise from 6.8% in 2008. This means that for every $1 a government earns, nearly 28 cents are spent on servicing debt alone, leaving little room for infrastructure, healthcare, or education investments. At the same time, the interest burden as a percentage of GDP has also increased, jumping from 5.4% in 2008 to 8.2% in 2024. Governments are now paying more for the money they borrow, putting fiscal sustainability at risk.

Source:

Afreximbank

Period:

2008, 2019, 2024
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