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

Borrowing costs in African countries (2008, 2019, and 2024)

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

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Period:

2008, 2019, 2024

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