Africa’s mounting debt crisis could undermine the continent’s economic progress and stability. The problem has worsened with the economic fallout of the COVID-19 pandemic, the war in Europe, and the impacts of climate change. The current debt situation in Africa has reached alarming proportions and could have severe consequences for human security.
Public debt in Africa surged to a staggering $1.8 trillion by 2022, representing a 183 per cent increase since 2010. What is even more concerning is that this rate is nearly 300 per cent higher than Africa’s gross domestic product (GDP) growth rate during the same period. As a result, the debt-to-GDP ratio in many African nations is projected to exceed 60 per cent in 2023, signifying a potential imbalance that will make it difficult for governments to manage their financial resources.
China has been a pivotal lender in Africa, extending loans exceeding $170 billion to 49 African countries and regional institutions between 2000 and 2022. New Institute for Security Studies (ISS) research sought to unpack Africa’s debt dilemma and understand China’s role better. The study found that while China was not the primary cause of the debt crisis, there were concerns about a lack of transparency, clauses impacting local industries, and the absence of collective restructuring options in Chinese loan contracts.
