Ever since 2007, Africa has found itself in a rapidly spiralling debt crisis. Trump’s America and Brexit are two factors which have recently tipped many of these countries over the edge and into even more serious trouble, exacerbating their existing issues with reduced market access. Changes to interest rates and currency have also had a knock-on effect. So which are the 20 most debt-addled African countries and what are the main factors which got them there?
High levels of poverty
Poverty is a key factor for a number of the top 20 most indebted African countries. Namibia, at position 19 in the list of 20 countries with $4,204,000,000 of debt, has a gap between rich and poor that is one of the widest in the world. Number 6 on the list, Angola, is $19,650,000,000 in debt. Angola’s wealth lies with just a few people, despite its rich natural resources. Zambia takes the 14th spot, with $5,445,000,000 of debt. Sixty-eight percent of Zambians live beneath the poverty line, despite the fact that it has reformed its economy so rapidly in recent years. Most of this poverty exists in rural areas. Poverty is an issue in Tanzania, too, which is at number 8 with $11,180,000,000 of debt. The Global Hunger Index score in Tanzania is the second worst of any other country in the East African Community. The top spot is taken by South Africa, which has $137,500,000,000 of debt and high levels of poverty despite being an upper middle income economy.
Look to number 11 on the list and you’ll find the Democratic Republic of the Congo with $7,644,000,000 of debt. It ranks at 186 out of 188 nations on the Human Development Index, mainly thanks to government corruption. Mozambique, at number 16, is $4,880,000,000 in debt. Corruption scandals have forced its economy down, and it now has one of the lowest GDP ranks per capita. President Mugabe’s period in power has struck a real blow to Zimbabwe’s economy, placing at at unlucky 13 with $6,975,000,000 in debt. High taxes and tariffs for private companies, leading in part to the country’s widespread poverty, are significant factors in this.
Expensive bonds to fund industry
Cote d’Ivoire is the 17th most debt-ridden African country, with $4,742,000,000 worth of debt. Its finances were stung when it issued a $1 billion bond, with a repayment schedule set at a high-level yield of 6.625%. However, the US government has just signed a $524.7 million, five-year deal to help reduce poverty in the country. Tunisia, at number 5 with $24,490,000,000 of debt, was similarly pushed into debt by issuing $1.75 billion of bonds to fund its growth. Number 15 on the list is Libya, with $5,278,000,000 of debt, although it is considered an upper middle income economy. It gains most revenue from the oil sector, an industry which makes up 80% of GDP.
An unstable and/or slow-growing economy
Algeria is number 18 with $4,344,000,000 of debt. It’s the 10th wealthiest African country overall, but its hydrocarbon-based economy isn’t growing as fast as its government and citizens might like. At number 12, the Republic of the Congo is in $7,644,000,000 of debt. Its main industry is petroleum. In 2010, it was approved for $1.9 billion of debt relief by the International Monetary Fund and World Bank. Morocco is in fourth place with $29,420,000,000 of debt, mainly thanks to its liberal supply and demand economy. Ghana is at number 7 with $11,230,000,000 of debt, despite its goal to be the first African nation to be judged as a developing country by the year 2029.
A fast-growing economy – with problems
Africa’s Gross Domestic Product (GDP) growth is actually second to South Asia overall, despite its debt issues. Uganda is number 20 on the list of debt-ridden African countries, with $4,126,000,000 of debt. Despite its growing wealth, it sits at 163 out of 188 countries in the Human Development Index. Ethiopia is number 10 with $9,956,000,000 of debt, but a fast-growing economy which offers its leaders and citizens hope. Its neighbor on the list, Nigeria, comes in at number 9 with $10,100,000,000 of debt but a similarly fast-growing economy.
Highest debt-to-GDP (Gross Domestic Budget) ratios
At number 3 we find Sudan, which is $39,700,000,000 in debt. More than 85% of this is in arrears. Egypt is just above it at number 2, with $48,760,000,000 of debt and a government debt-to-GDP ratio of 87.10%!
What can be done?
Measures to reduce poverty are key to holding up a country’s finances here, as are attempts to reduce corruption at government level, holding politicians to account wherever possible. Obviously in the case of dictatorships like Mugabe’s this is no easy task, but in many cases there are a number of effective things which can be done.
About the Writer
“Now working as a writer, Jackie started her career in finance and banking, but after becoming a mom refocused and decided to spend more time with her family. When she’s not writing, she volunteers for a number of local mental health charities and also has a menagerie of pets to look after”