A World Bank report released in 2021 shows that low and middle-income Sub-Saharan African countries combined were owing the World Bank $702 billion as of 2020.
According to reports, this is the highest level of debt in a decade.
In 2010, the debt of Sub-Saharan Africa was estimated to be over $305 billion.
Of the owing countries, five – Mozambique, Zambia, Capo Verde, Angola and Nigeria have the highest amounts owed.
Mozambique’s national debt was estimated to be around 19.62 billion dollars in 2020. The country owes 9.3 billion to the World Bank.
Between 2019 and 2020, the ratio in Mozambique grew by 20 percentage points. This had increased by 99 percentage points in a decade (2010-2020).
In 2020, Zambia’s external debt to the World Bank was $23. 309 billion. Between 2019 and 2020, the ratio in Zambia grew by 32 percentage points. The ratio has risen by 138 percentage points in a decade.
Zambia’s new government, led by President Hakainde Hichilema, took office in August 2021 and promised to address the crisis. Since the pandemic, Zambia has become the first African country to default on its sovereign debt.
According to the World Bank, Capo Verde debt in 2020 was $ 2.0 billion. Between 2019 and 2020, inflation fell by 0.1 percentage point, owing primarily to a euro peg and lower energy costs. On the other hand, revenue shortfalls increased the fiscal deficit to 10.4 percent of GDP in 2020, up from 1.8 percent in 2019.
The current account deficit of 15.6 percent of GDP in 2020, reversing a surplus of 0.3 percent the previous year, is mainly due to a 69 percent reduction in tourism receipts. The high percentage of non-performing loans to gross loans (12%) lowers the quality of banking sector assets and increases risks, eroding financial sector stability.
According to the World Bank, Angola’s external debt stocks in 2020 were $67.287 billion. In 2021, the World Bank Board of Executive Directors approved a $700 million Development Policy Operation (DPO) to support the government of Angola’s efforts to boost the country’s macro-financial and institutional environment for increased private-sector-led growth.
Due to a lack of fiscal revenues (particularly from oil) and limited financing choices, Angola has been in an economic and financial crisis since 2015. Due to a lack of financial resources, the government’s COVID-19 intervention has been limited.
According to the Debt Management Office, Nigeria’s public debt reached N38 trillion ($92 billion) at the end of the third quarter of 2021, with the entire debt stock increasing by N2.540 trillion in three months between July and September 2021.
On the other hand, the government plans to reduce total public debt by 2025.
According to the World Bank, Nigeria’s debt, being considered sustainable, is susceptible and costly. The Bank says Nigeria’s debt is also at risk of becoming unsustainable in the case of macro-fiscal shocks.
Meanwhile, the report says Ghana and Nigeria recorded a 17 percent increase in external debt stocks driven by purchases from the International Monetary Fund (IMF) of $1 billion and $3.4 billion, respectively.
The research cited a $3 billion pre-pandemic Eurobond issued to Ghana and a 16 percent increase in private sector non-guaranteed debt in Nigeria as explanations for the increase in the debt burden.