World Bank Raises the Alarm About African Debt Distress (Again)

Chart showing the composition of external debt and risk of debt distress for eastern and southern African countries under the SDFP, as of December 31, 2021. Source: World Bank, International Debt Statistics Database.

For the second time in a week, the World Bank has raised the alarm about mounting debt in Africa. A new blog post shows that not only has public debt in Southern and Eastern Africa doubled over the last decade, but the proportion of pricy private debt is also growing rapidly.

This rapid increase in private debt, which usually carries higher interest rates than bilateral debt, makes these countries more vulnerable to debt distress. Its rise reflects the retreat of more traditional concessional lending, not least due to a rapid decline in lending from Chinese policy banks. At present, private debt makes up about a fifth of East and Southern Africa’s total debt portfolio.

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by Cobus van Staden

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