Why Africa’s borrowing isn’t always a crisis
While Africa is frequently portrayed as being overwhelmed by unsustainable debt, recent developments show that many African nations are leveraging debt to invest in infrastructure, energy, and public services that could boost long-term development.
Africa's debt challenges began in the late 1970s when several countries accumulated substantial external debt to support public expenditure. Weak domestic savings and declining commodity prices later made it difficult for countries to service this debt.
A report published in May by the African Export-Import Bank (Afreximbank), titled “State of Play of Debt Burden in Africa and the Caribbean,” reveals that the average debt-to-GDP ratio across the continent remains high, though it differs between countries. In more than 60% of African nations, the ratio is expected to exceed 50% in 2025. Some countries, including Ghana, Cape Verde, and Sudan, face debt levels surpassing 100% of GDP.
However, not all debt should be viewed negatively when it finances productive investments. Debt used for projects that expand a country’s productive capacity can help increase GDP, raise tax revenues, and improve living standards. Investments in infrastructure such as transportation, energy, and communication can encourage business activity, enhance trade, and create employment.
According to the Afreximbank report, Morocco holds 5.9% of Africa’s total external debt in 2025. The country has directed borrowed funds toward large-scale projects in infrastructure, renewable energy, and digital technology. Key projects include the expansion of Tanger Med port, the Noor Ouarzazate solar complex, and the SIR railway project in Greater Casablanca, all contributing to economic growth and improved connectivity.
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Senegal, which has around $1 billion in debt and is one of the International Monetary Fund’s (IMF) highest debtors in Africa, has used this borrowing to develop significant infrastructure projects. These include the Blaise Diagne International Airport, the Dakar-Diamniadio Toll Highway, and the Regional Express Train, all under the “Plan Sénégal Émergent.” These investments have enhanced Senegal’s infrastructure, boosted tourism, and supported economic growth.
In Ethiopia, large-scale investment has gone into the Grand Ethiopian Renaissance Dam (GERD), which is designed to more than double the country’s power generation capacity. GERD is Africa’s largest hydropower project and is scheduled for inauguration in September.
Nigeria has also turned to debt, particularly from China, to fund major transportation infrastructure. Projects include the Lagos-Ibadan rail, Itakpe-Warri rail, Abuja-Kaduna rail, Lagos Blue Line Metro rail, and the Abuja Metro rail.
Despite these investments, African countries continue to face challenges such as global interest rate increases, currency depreciation, and rising debt servicing costs. Still, the narrative is evolving as many countries strive to manage borrowing while ensuring development impact.
This story is written and edited by the Global South World team, you can contact us here.
