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Africa's debt crisis worsened after COVID-19, with public debt reaching $1.8 trillion by 2022 - an increase of 183% since 2010. Debt servicing consumed over 16% of government revenues in 2023, leaving many nations prioritizing repayments over public services like healthcare. Regions such as North, Sub-Saharan, and Southern Africa face unique challenges due to varying debt loads, economic structures, and creditor relationships.
Key points:
Digital platforms like Debexpert are modernizing debt management with transparent auctions and advanced analytics, offering faster and more efficient restructuring options. However, Africa's path forward hinges on improving revenue collection, adopting better fiscal policies, and coordinating global creditor efforts.
North Africa shoulders nearly 40% of Africa's total debt, making it the region with the continent's heaviest debt load. The recovery landscape here is far from uniform: oil-rich nations benefit from more fiscal leeway, while countries like Egypt and Tunisia, which lack significant oil revenues, face tight financial constraints.
Egypt's debt reached 88% of its GDP in 2022, pushing the country close to its fiscal limits. Similarly, Tunisia's fiscal space was limited to just 43% of GDP, reflecting its economic fragility. These figures highlight both nations' susceptibility to economic disruptions.
Between 2010 and 2021, external public debt in the Arab region rose from 23% to 37% of GDP. During this period, external public debt as a percentage of exports surged from 71% in 2010 to 122% in 2021, with debt service costs climbing to $33 billion in 2021.
The region's economic recovery has been inconsistent. Growth slowed to 1.9% in 2024, down from 2.9% in 2023. However, Egypt stood out with a 4.2% year-on-year growth in Q4 2024, marking its fastest pace since Q3 2022 despite ongoing macroeconomic hurdles.
Inflationary pressures were a major challenge in 2023, fueled by global food and fuel price hikes and currency devaluations in Egypt and Tunisia. These shocks underscored the vulnerabilities of economies heavily reliant on imports.
Access to capital markets has been a crucial factor in recovery efforts. In Q1 2025, six North African countries - Benin, Côte d'Ivoire, Gabon, Kenya, Egypt, and Morocco - issued foreign currency-denominated sovereign bonds. This demonstrated selective investor confidence despite the broader economic struggles in the region.
According to Abel Gwaindepi of DIIS, "For long term debt sustainability in African economies, the global debt architecture reforms should be paired with measures to boost economic transformation and resilience".
One of the region's biggest hurdles is revenue mobilization. Government revenues in African countries average just 19% of GDP, far behind the 28% average in other emerging markets and developing economies. This revenue shortfall hampers governments' ability to manage debt while maintaining critical public services, creating an urgent need for innovative financial solutions.
To address mounting fiscal pressures, new market mechanisms have emerged. Private creditors now hold a growing share of African debt, making restructuring more complex compared to traditional bilateral agreements. This shift reflects both the evolution of financial markets and a decline in concessional lending options.
With external public debt service consuming an increasing share of export earnings and government revenues, countries are exploring creative debt relief tools and comprehensive restructuring strategies.
In North Africa, platforms like Debexpert and institutional investors have become key players in debt markets. These platforms simplify the restructuring process, leveraging secure debt trading systems and advanced portfolio analytics to navigate the challenges posed by the rising influence of private creditors.
The path to recovery for the region hinges on better management of public finances. This includes adopting medium-term expenditure and revenue plans, improving debt data accuracy, and crafting prudent borrowing strategies. By focusing on these areas, North African countries can work toward reducing the risk of future financial crises.
Sub-Saharan Africa entered the pandemic already grappling with serious debt challenges, which have only worsened over time. By the end of 2022, public debt in the region had soared to $1.14 trillion - more than triple the amount recorded in 2010. While the debt crisis was already brewing before COVID-19, the pandemic amplified these vulnerabilities. Let’s take a closer look at how these issues have shaped the region's debt landscape and restructuring efforts.
Even before the pandemic, one-third of Sub-Saharan African countries were either in debt distress or at high risk of it. By 2022, this number had grown to 22 nations, up from 20 in 2020.
The pandemic struck a heavy blow to the region's economy. Africa's GDP fell by $165 billion in 2020 compared to pre-pandemic projections, and fiscal deficits nearly doubled - from 4.3% to 7.2% of GDP between 2019 and 2020. The debt-to-GDP ratio for African nations climbed past 70% in 2020.
Certain countries face particularly severe debt burdens. Angola, Cabo Verde, Republic of Congo, Eritrea, Mozambique, Sudan, and Zambia all have debt-to-GDP ratios exceeding 100%. Across the region, the median public debt-to-GDP ratio jumped from 32% in 2010 to 57% by 2022.
Adding to the complexity is a shift in creditor composition. The role of private creditors has grown significantly, with public and publicly guaranteed external debt owed to private creditors more than doubling from 3.4% of GDP in 2010 to 8.8% in 2019. Meanwhile, the share of concessional loans - those offered on more favorable terms - dropped from 58% in 2002–2007 to less than half (49%) during 2012–2017.
The pandemic created both domestic supply and global demand disruptions, deepening existing economic challenges and widening current account deficits.
Brahima Sangafowa Coulibaly of the Brookings Institution highlighted, "In the scramble to finance development agendas in a difficult post‐COVID environment, effective management of sovereign debt - as well as efficiency in domestic resource mobilization and in public spending - have become imperative".
Oil-exporting nations have been especially hard-hit. Their public debt-to-GDP ratios surged by 18 percentage points to 68.5% in 2020, compared to a 9-percentage-point increase for Sub-Saharan Africa as a whole.
The region’s external financing needs for 2020–2023 were estimated at $890 billion - equivalent to 55% of its 2020 GDP - with a financing gap of roughly $130 billion. However, international support has fallen short. The Debt Service Suspension Initiative (DSSI), for instance, raised only $4 billion, far below the $12 billion target for participating countries.
Efforts to recover have been further hampered by limited tax revenues and underdeveloped financial markets. Fiscal deficits widened to 5.2% of GDP in 2022, up from an estimated 4.8% in 2021.
The composition of debt ownership has added another layer of difficulty to recovery efforts. By 2021, Sub-Saharan Africa’s total debt stock reached $539.1 billion. Of this, 40% was owed to private creditors, 28% to multilateral development banks, and 11% to China. On average, governments in the region spend 12% of their revenue on external debt servicing.
Some progress has been made in restructuring. Zambia, for example, reached an agreement in March 2024 with its Eurobond-holder creditor committee to restructure its debt. The country is expected to exit default in the second half of 2024 after three years, though a severe drought and stagnant copper production continue to weigh on its currency, the kwacha.
Ghana is also on track to exit default by late 2024. Negotiations with private bondholders, who hold the majority of its $13 billion external debt, are ongoing. Exiting default by 2025 could help Ghana regain access to global credit markets and attract foreign investments.
Ethiopia, meanwhile, has been in talks with the International Monetary Fund (IMF) since early 2024 over a loan and reform package. Progress has been slow, largely due to the government’s reluctance to implement structural reforms like currency depreciation. However, Ethiopia is expected to agree to a devaluation of the birr by the third quarter of 2024 to secure funding from the IMF and World Bank.
During the pandemic, domestic bond markets became a more prominent source of private borrowing as Eurobond issuance declined.
As Chris Heitzig, Aloysius Uche Ordu, and Lemma Senbet from Brookings observed, "COVID-19, through economic and health shocks, has greatly awakened us to African debt fragility and unsustainability".
Southern Africa presents a varied picture when it comes to managing its debt. While some countries have made strides in addressing their financial challenges, others continue to grapple with restructuring hurdles. The pandemic served as a wake-up call for the region, exposing vulnerabilities and prompting new strategies to tackle long-standing issues.
The COVID-19 pandemic laid bare the structural weaknesses in the Southern Africa Development Community (SADC), exacerbating pre-existing debt problems. South Africa, the largest economy in the region, saw its debt-to-GDP ratio climb from 65.6% in 2020 to 80.5%, largely due to economic support measures during the pandemic. The economic fallout was severe: GDP shrank by over 6% in 2020, investment dropped by 15%, unemployment reached 30% in the first quarter, and employment fell by more than 13% in the second quarter. Adding to these challenges, the country has struggled with chronic electricity shortages, further slowing its recovery.
Meanwhile, Zimbabwe continues to face significant hurdles. The country remains in negotiations with creditors over its external debt, which has been unresolved since its default in 1999.
These fiscal challenges have spurred governments across the region to implement targeted measures aimed at recovery and stability.
Efforts to rebuild Southern Africa’s economies have centered on restoring investor confidence through fiscal reforms and structural adjustments. In South Africa, these measures include tightening fiscal policies, improving spending efficiency, and boosting revenue collection. A key initiative is the government’s ambitious public infrastructure program, which aims to attract R1 trillion in investments over the next decade. Additionally, the 2019 Integrated Resource Plan outlines significant expansions in renewable energy generation, which could help address the country’s persistent power shortages.
However, the road to recovery is far from easy. South Africa, for instance, must tackle tough reforms, such as reducing its public wage bill and curbing inefficiencies, corruption, and wasteful spending. Enhancing tax collection and plugging fiscal leakages are also critical steps.
To complement these recovery efforts, Southern Africa has introduced innovative mechanisms to manage its debt burden. South Africa, leveraging its position as G20 president, has pushed for reforms that prioritize sovereign debt issues and advocate for a review of the G20’s Common Framework for debt treatments.
The region has seen progress in debt restructuring. For example, Zambia reached an agreement in March 2024 with Eurobond holders to restructure US$3 billion in sovereign bonds under the G20 Common Framework. After a three-year process, the country is expected to exit default by late 2024.
New institutional frameworks are also emerging to support better debt management. In early March 2025, the G20 established a committee of experts to explore ways to reduce external borrowing costs for African nations. Around the same time, the African Union launched its own credit rating agency to address similar concerns.
A notable trend in the region is the use of state-contingent debt instruments (SCDIs), also known as value recovery instruments. These tools balance debt relief for borrowers with the need to gain bondholder approval, helping to speed up the restructuring process.
In Africa, traditional sovereign debt markets have long depended on bilateral negotiations and multilateral frameworks. However, the rise of digital platforms is reshaping how debt is managed, bringing much-needed transparency and efficiency to the process. As the continent continues to recover from the economic impact of COVID-19, these platforms are proving essential for modernizing debt management systems.
As regional markets evolve, platforms like Debexpert are playing a key role in transforming debt trading. Debexpert facilitates the buying and selling of various debt types through structured auction formats, including English, Dutch, Sealed-bid, and Hybrid auctions. These formats are designed to simplify transactions and make the process more efficient.
The platform leverages advanced analytics to help users uncover the true value of their portfolios. With tools for segmentation and performance projections, Debexpert makes debt restructuring more precise and effective. This approach addresses many of the inefficiencies and lack of transparency that have plagued traditional debt restructuring methods in Africa.
Debexpert’s ability to streamline transactions is evident in its results. For example, in March 2025, a user reported that a pre-qualified buyer network quickly generated interest in their portfolio. Within just 18 days, a structured auction closed the transaction at prices that exceeded expectations. Another case in February 2025 saw a dealership portfolio attract 12 offers within the first week through the platform’s buyer network.
Debexpert’s secure infrastructure and strict compliance standards align with the transparency goals many African governments are pursuing as part of their post-COVID recovery efforts. With a vetted network of over 1,000 investors and more than 500 financial institutions, the platform creates a competitive marketplace that often results in better pricing outcomes.
"With the Debexpert platform, users can sell and buy debt portfolios quickly, having 100% control at all stages of a transaction." - Ivan Korotayev, CEO of Debexpert
The platform’s commission structure, ranging from 1% to 5%, offers a cost-effective alternative to traditional debt restructuring methods. Feedback from users highlights its ability to reveal true market value through the auction process. Owen Richardson shared his experience:
"The auction process helped me discover the true market value of my portfolio. Got better pricing than expected and the whole process was transparent."
Additionally, Debexpert’s mobile apps for Android and iOS make it easy for users to monitor transactions in real time, enabling quick market responses.
These advancements signal both opportunities and challenges for sovereign debt recovery, as digital tools like Debexpert continue to reshape the landscape.
When it comes to tackling sovereign debt in Africa, the process is a mix of traditional restructuring hurdles and emerging digital solutions like Debexpert. These regional nuances reveal how platforms like Debexpert are weaving into the broader debt management framework.
Take North Africa, for example. This region has leaned on bilateral debt swaps for years. A notable case is Egypt's 2009 agreement with Italy, which redirected $15 million toward a school feeding program. These swaps have been a key strategy in managing the region's significant debt load.
In Sub-Saharan Africa, the debt situation is more pressing. Debt ratios soared from 30% of GDP in 2013 to nearly 60% by 2022, with interest payments now four times higher than in advanced economies. Kenya is a prime example, with its debt climbing to 63% of GDP - well above the 55% sustainability threshold. Meanwhile, Nigeria is exploring digital solutions, piloting the tokenization of government bonds in 2022 to modernize debt management.
Southern Africa, on the other hand, has experimented with debt-for-nature swaps. While these deals support environmental goals, like Gabon's $500 million swap to expand marine-protected areas, they often deliver limited debt relief due to high transaction costs.
The Debt Service Suspension Initiative (DSSI) provided temporary breathing room by pausing $8.9 billion in debt service payments between May 2020 and December 2021. However, African leaders remain cautious. Romuald Wadagni, Benin's Minister of Economy and Finance, expressed concerns:
"[T]hese solutions will further tarnish the reputation of our governments and jeopardize their access to future financing... A moratorium, whether desired or imposed, could even be considered in some loan documents as an event of default by private creditors, even if it only concerns bilateral public creditors."
This is where digital platforms like Debexpert come into play. By offering transparent auctions, advanced analytics, and secure communication, Debexpert is improving market liquidity and making debt trading more efficient.
| Region/Platform | Market Impact | Recovery Drivers | Restructuring Tools |
|---|---|---|---|
| North Africa | Nearly 40% of Africa's public debt | Bilateral debt swaps with long-established frameworks | WFP-brokered swaps, like Egypt's 2009 agreement |
| Sub-Saharan Africa | Debt ratios nearing 60% of GDP | Digital innovations and tokenization pilots | Tokenized bonds, as seen in Nigeria's 2022 pilot project |
| Southern Africa | Moderate debt levels, environmental focus | Debt-for-nature swaps supporting marine protection | Gabon's $500M swap for marine-protected areas |
| Debexpert Platform | Boosts liquidity and transparency | Transparent auctions and vetted investor networks | Multiple auction formats, secure file sharing, real-time chat |
Beyond regional trends, the creditor landscape is becoming more complex. Private creditors now hold 44% of African debt, up from 30% in 2010, while borrowing costs average 11.6% - a steep 8.5 percentage points above U.S. benchmarks. Between 2019 and 2021, 25 African nations spent more on interest payments than on healthcare.
China's role adds another layer of complexity. While it joined official creditor committees for Ghana and Zambia, it declined to do so for Sri Lanka. Scope Ratings describes this as an "à la carte approach", complicating coordinated efforts among diverse creditor groups.
Rwanda's President Paul Kagame offered a balanced perspective on debt relief:
"We shouldn't be looking for excuses to cancel debt for its own sake. If there is another idea that would achieve the same results, that is welcome. Stimulus is stimulus, no matter the mechanism."
Finally, African governments face the challenge of boosting domestic revenue. With an average tax-to-GDP ratio of just 16.5% - far below Asia Pacific's 19.1%, Latin America's 21.9%, and the OECD's 33.5% - fiscal constraints remain significant. Without coordinated restructuring, many distressed nations risk prolonged credit struggles. Still, a combination of regional strategies and digital tools like Debexpert is shaping the path forward for post-COVID debt recovery in Africa.
Africa's journey toward post-COVID debt recovery is blending traditional restructuring methods with modern digital tools. In 2020, the continent's debt-to-GDP ratio surged past 70%, while fiscal deficits nearly doubled - from 4.7% in 2019 to 7.2% in 2020. This sharp rise has driven African nations to seek innovative strategies beyond traditional bilateral agreements and debt swaps, reshaping how recovery is approached.
The G20 Common Framework provided some relief, with Ghana and Zambia receiving debt reductions of approximately 50%. However, as the ODI observed, these efforts have often been "too little, too late and too complex". This highlights the pressing need for more effective and streamlined debt management solutions.
Digital platforms like Debexpert are stepping in to fill this gap. Initiatives such as Nigeria's 2022 pilot project and Ghana's tokenized debt platforms show how digital tools can enhance efficiency, transparency, and cost-effectiveness compared to traditional approaches. These advancements, when paired with fiscal reforms, open new doors for innovative restructuring. As Ebrima Faal, CEO of Development Perspectives UK, aptly stated:
"By amplifying efficiency, transparency, and global accessibility, tokenization can empower African governments to better manage their debt and champion sustainable economic growth."
A key challenge remains in revenue mobilization. Christopher Adam, Professor of Development Economics at Oxford University, emphasized the importance of building stronger fiscal buffers, noting that "the focus still remains on the question of domestic revenue mobilization". Strengthening these domestic resources is essential for long-term economic stability.
For stakeholders in the sovereign debt space, several actionable insights emerge. Policymakers must implement decisive fiscal and monetary reforms to mitigate the ripple effects of sovereign defaults on private funding costs. The international community should work toward a unified framework for orderly debt restructuring. Meanwhile, investors could explore opportunities in African markets for portfolio diversification and risk management. Brahima Sangafowa Coulibaly from the Brookings Institution highlighted this urgency:
"In the scramble to finance development agendas in a difficult post-COVID environment, effective management of sovereign debt - as well as efficiency in domestic resource mobilization and in public spending - have become imperative."
The way forward lies in collaboration. African governments, fintech innovators like Debexpert, and regulatory bodies must work together to foster an environment that supports digital debt management solutions. With the IMF projecting a funding gap of $345 billion in the region through 2023, the integration of traditional restructuring methods with cutting-edge digital platforms offers a promising path to sustainable recovery. These digital tools are not just a complement but a critical part of Africa's broader recovery strategy.
Private creditors have taken on a larger role in Sub-Saharan Africa's debt restructuring, reflecting their increasing share of the region's debt - rising from 30% in 2010 to 44% by 2021. Despite this, their involvement in restructuring efforts has often been limited. Many private creditors hesitate to participate, citing concerns about fairness and fears of setting risky precedents for future negotiations.
Efforts like the G20's Common Framework have been introduced to encourage more active participation from private creditors. Still, achieving meaningful debt relief remains a complex challenge. To navigate these issues and support the region's recovery from the impacts of COVID-19, effective collaboration among governments, international organizations, and private stakeholders is crucial.
North African nations grapple with serious hurdles in maintaining stable debt levels over the long term, largely due to underlying economic vulnerabilities. These economies often rely heavily on commodity exports, lack a diverse industrial base, and struggle with generating enough domestic revenue. This combination leaves them particularly exposed to external disruptions.
Adding to the strain, high debt levels and growing interest payments eat into government budgets, limiting resources available for developmental investments. On top of that, external challenges - like unpredictable commodity prices and surging food costs - intensify fiscal pressures, making it even tougher to manage debt effectively and achieve financial stability.
Digital platforms such as Debexpert are transforming how debt management and recovery are handled in Africa. By simplifying processes and promoting transparency, these platforms enable banks, lenders, and institutional investors to trade debt portfolios more efficiently. They provide a secure and adaptable solution for managing debt recovery efforts.
With tools like portfolio analytics, real-time communication, and secure file sharing, platforms like Debexpert not only enhance recovery rates but also help cut operational expenses. This digital shift has become even more important in the post-COVID landscape, where financial technology is playing a key role in improving access to financial services across the continent. Leveraging these advancements allows stakeholders to tackle the complexities of sovereign debt recovery while building stronger economic resilience.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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