It is typical for us in Africa as we go about our daily lives, to gripe about our “crappy” politicians. It would seem to us that they just can’t get anything right. The most politically aware would then launch into a laundry list of their everyday ineptitudes, inanities and outright crimes. While there is of course some truth to these accusations, it is also true that there also circumstances that rarely get a mention in everyday discussion in Africa, which make it seem that they can’t get anything right, for which the issue of whether they are at fault is not so clear-cut. One of those circumstances is that of government debt, particularly external debt.
The international NGO Christian Aid, reported that 32 countries in Africa spent more on external debt payments than healthcare in 2023, while 25 spent more on external debt payments than education. In 2023, African governments spent more than twice as much on external debt payments as healthcare, on average, and slightly more on external debt payments than education. In all, 34 African countries spend more on external debt payments than healthcare and/or education. The Christian Aid report further stated that the external debt service total for all African countries in 2023 was $85 billion. The corresponding figure for 2024 was $104 billion. Moreover, debt servicing is pushing aside key spending to confront the climate and environmental crises. On average, African governments are spending seven times more on external debt payments than on measures to adapt to climate change. You might recall that climate change is a problem Africa has contributed the least to but will bear most of the brunt of its negative fallout.
Some time back, a report presented by the United Nations (UN) on the global debt crisis, showed that countries in Africa borrow at rates that are, on average, four times higher than rates for the US and eight times higher than for Germany. This of course, is because African countries are perceived to significantly more likely to default on debt payments. While this is perfectly understandable, the effect of this on the social development plans of African governments is nothing less than catastrophic. Perhaps it will be enlightening to look at the catastrophic effects of Africa’s external debt servicing regime in some specific countries. We will be looking at Kenya, Ethiopia, Nigeria, Zambia and Malawi.
As Kenya’s debt payments have increased in recent years, public spending has fallen steeply. Between 2017 and 2022, real public spending per person fell by a huge 15%. By 2025 it is still projected to be 7% less than in 2017, and a similar level to 2015 – a decade without any real increase in public spending. The reduction in spending in social sectors is manifested in lack of essential services in health and education. According to Development Finance International, just over 40% of children complete secondary school and around 55% have access to healthcare. There is little chance of these proportions increasing, if external debt payments continue to prevent public spending from increasing.
Across Ethiopia, civil society groups record poor access to equitable and quality healthcare. In education, the coverage and education package are not fulfilling the minimum standards, leading to a generally poor quality of education. Development Finance International reports that only 15% of Ethiopian children complete secondary school, and just under 40% have access to healthcare.
Nigeria’s real public spending per person has been falling every year since 2020, and was projected by the International Monetary Fund (IMF) to be a gigantic 40% less in 2024 than it was in 2019. These cuts are happening in a country where just over 55% of children complete secondary school and just under 45% have access to healthcare. With the debt crisis, most of the country’s revenues are now being channeled to debt servicing obligations at the expense of basic social services. The financial data/news service Bloomberg some time back, made the projection that Nigeria will spend six times more on servicing its debt in 2024 than on building new schools or hospitals. The United Nations Educational Scientific and Cultural Organization (UNESCO) estimated that the number of primary school aged children not attending school has increased from 7.5 million in 2010 to 10 million today, and the number of secondary school-aged children not at school has increased from 5 million in 2010 to 13 million in 2024.
The Zambian government’s external debt payments shot up, reaching 24% of revenue by 2019. Zambia was only able to keep making these payments by cutting public spending, including on social services. Real public spending on healthcare fell by 13% between 2014 and 2020, while spending per person on education fell by a staggering 40% in the same time.
When the Covid pandemic began, it became impossible for Zambia to keep making these high debt payments. China and other governments agreed to suspend debt payments, but private bondholders refused. In late 2020, Zambia defaulted on its debt payments to external private lenders and governments.
Since defaulting, Zambia has been able to use savings on debt payments to increase spending on social services again. Real education spending per person has increased by 36% since 2021, although it is still lower than in 2014. Real health spending per person is now 48% higher than in 2021, and 28% higher than in 2014. If Zambia were making all its external debt payments, they would equal as much as the government’s spending on education, healthcare and social protection combined.
The debt crisis is taking its toll on Malawi’s public spending. Between 2022 and 2026, Malawi’s real public spending per person is expected to fall by 32%; and in 2026 it will be over 10% lower than it was in 2015. These cuts are happening in a country in which only 15% of children complete secondary school, and just under half have access to healthcare.
It would be quite appropriate at this stage to wonder, “How did we get here?” Well the story of Africa’s debt debacle comes in two chapters with about 8 years separating them. The first chapter starts in Africa’s post-independence era (basically the 1950s/60s/70s). Africa’s post-independence era fell into a slightly longer and more global era known as the “Cold War” era that ran from the end of WW2 in 1945 to the fall of the Berlin wall in 1989. During the Cold War, the US and the now defunct Union of Socialist Soviet Republics (USSR) vied for global dominance. Each was doing its best to get its economic ideology (Capitalism in the case of the US and Communism in the case of the USSR) adopted by the rest of the world. To a lesser extent, Communist China took part in this ideological battle mainly with the USSR to see who would be the leading light of the communist world. Communism reach its highest point during the Cold War era, since its ideas were originally expounded upon by Karl Marx and Friedrich Engels in 19th century, with at least one third of the globe declaring themselves to be communist countries.
With the US and USSR vying for global influence during the period, generous loans to Third World countries became a major weapon in each superpower’s arsenal. Post-colonial African governments, having inherited weakened economies and struggling mightily to navigate a structurally unequal global economy, gobbled up this windfall of generous loans as many of them were cash-strapped and in desperate need of funds to carry out development programs. They would constantly play the two superpowers off each other (and China off the USSR for African nations that had declared for Communism) in a bid to extract ever more generous loans. They often carried on like these games could be played forever. It must also be said that the lenders failed to carry out proper due diligence procedures and the result was that debt levels in Africa soared beyond the point at which they could be realistically serviced.
The music would stop playing in 1989. That year the USSR basically imploded and rather suddenly ushered in the end of the Cold War. That led to Capitalism being virtually uncontested by any other ideology and with that, the buying of influence with loans came to be seen as unnecessary. Virtually overnight, loans were called in. This left African governments scrambling for money they didn’t have to repay their loans. It wasn’t just loans that were cut back. Development aid was significantly cut back too. Between the last days of the Cold War and the dawn of the new millennium, development aid in general fell by 40%.
As the new millennium approached, a movement in Europe started gathering steam to have Third World debts forgiven. The movement, known as Jubilee 2000, would spread to the US largely through the heroic efforts of the Irish rock band U2’s front man, Bono. The result of this movement’s efforts was that in 1999-2000, the debts of the world’s poorest countries were forgiven to a significant degree.
The second chapter of the debt debacle has its roots in the Global Financial Crisis (GFC) of 2008. Following the crisis, interest rates fell across the western world. This made lending to the developing world attractive, as high interest rates could be charged. The GFC ushered in a period of lower growth globally. This was made worse in the developing world by subsequent shocks, including Covid-19, the climate crisis and the Ukraine conflict, and soaring food prices.
The upshot of all this is that African government external debt payments was projected to be at least 18.5% of budget revenues in 2024, the highest since 1998. This was almost four times as much as in 2010, and the highest of any region in the world.
The International Monetary Fund (IMF) says governments struggle to pay external debts once they are higher than 14%–23% of government revenue. In 2024, 28 African countries were projected to have external debt payments over 14% of government revenue, with 23 of these paying over 20% of government revenue. In contrast, in 2010 no African governments were spending over 20% of revenue on external debt payments, and only one, Tunisia, was spending more than 14%.
Again, a coalition of western NGOs is calling for debt cancellation. Beyond that, they are also calling for a redesign of the global economic system so that is more just and does not consign the global majority to poverty, while accumulating wealth for a tiny, yet powerful, global minority.
As an African, one can only view the efforts of this western coalition with profound admiration and a sense of gratitude but it remains to be seen that they will eventually be successful in their efforts.
I personally think that there are more modest efforts also worth pursuing. Given the statement made by the IMF that governments struggle to pay external debts once they are higher than 14%–23% of government revenue, I think it would go a long way if yearly external debt servicing was pegged at no more than 5% of government revenue. In the rebuilding of Europe effort after the destruction of WW2, Germany’s debt repayments were capped at 3.5% of export revenue.
It should be noted that even such a modest reform won’t be achieved without a hard fight, and I don’t think we need to wait for caring westerners before we get cracking on this. We all, perhaps through the signing of petitions and the actions our civil society groups, need to let our respective governments know about our grievances with the structural imbalances of the international financial system and have them make concerted efforts, perhaps joining hands with other developing nations in the global south to have these imbalances addressed, starting with the capping of government revenue used for external debt servicing at 5%.
This is something we need to do if we are ever going to get the chance to break out of the vicious cycle of debt, which deepens our dependence on commodities, which keeps our economies fragile and most Africans mired in poverty.
BEFORE YOU GO: Please check out my book on Amazon, Why Africa is not rich like America and Europe. Thank you
Bibliography
- Hertz, Noreena. 2004 The Debt Threat: How debt is destroying the developing world…and threatening us all New York: HarperCollins
- Sachs, Jeffrey. 2005 The End of Poverty: How We Can Make It Happen in our Lifetime London: Penguin Books
- Larble, Jennifer et al. 2024 ‘Between Life and Debt’ Christian Aid
