Africa’s debt crisis: Expert raises alarm on sovereign defaults

A growing number of African countries are facing a debt crisis, with nearly half of all distressed sovereign credit and high-yield debt worldwide coming from the continent, according to a financial analyst, Tolulope Osunsina.

According to the IMF’s October 2025 Regional Economic Outlook, 20 Sub-Saharan African countries are now in or at high risk of debt distress, with the global sovereign debt monitor 2025 estimating that around 70% of sub-Saharan African nations carry a high or very high debt burden.

Osunsina, an MBA candidate at SMU Cox School of Business, explained that, “The continent’s total public debt has quadrupled since the early 2000s, reaching $2 trillion in 2024, with an average debt-to-GDP ratio of 68.6% in 2023.”

In an exclusive interview with our correspondent, Osunsina shared insights from his experience, advising on sovereign debt restructuring engagements across sub-Saharan Africa, citing a case study of a Central African nation that defaulted on a crude-backed facility, highlighting the complexities of sovereign debt restructuring.

According to the infrastructure finance professional, “The country’s oil production shortfalls, price volatility, and accumulated debt commitments led to a cascading competition for export receivables,” adding that “The lender syndicate’s legal rights were clear, but the path to recovery was not.”

Osunsina stressed the importance of building rescheduling mechanisms into facility structures to aid recovery.

“Covenants that trigger default when a sovereign’s debt-to-GDP ratio exceeds a threshold do not help lenders recover capital. They accelerate the crisis.”

Stress-testing facilities against production downside scenarios is also crucial, according to Osunsina. “Lenders who do not model the downside before signing discover it during the restructuring.”

Before signing any facility, it is essential to map the full creditor stack, the expert added.

“Facilities that appear senior in isolation may be junior in practice to pre-existing claims on the same export receivables.”

Investing in relationships with sovereigns before default is vital, Osunsina emphasised, while noting that “The quality of the relationship between creditor and sovereign, built during the deal, not after the missed payment, is as important as the legal structure of the security package.”

Structuring facilities with the sovereign’s political reality in mind is also key.

“A restructured facility that requires a sovereign to accept terms its parliament or ruling party cannot approve will not close,” Osunsina, however, warned.

He further emphasised the need for African advisory capacity to address the debt crisis.

“Africa’s debt crisis will not be resolved by multilateral institutions alone. The G20 Common Framework has demonstrated that coordinated creditor solutions take years and produce inconsistent outcomes.”

He added that, “What Africa’s debt market lacks is not capital,” stressing that Africa’s total domestic savings exceed $1.1 trillion, according to Africa Finance Corporation’s 2025 State of Africa’s Infrastructure Report, and these savings are largely sitting in pension funds and banks that are chronically underdeployed into productive infrastructure.

According to him, the continent’s debt market lacks the institutional infrastructure to connect that capital to bankable transactions through instruments that investors trust and that governments can sustain.

Osunsina concluded that, “Building that infrastructure is, at its core, an advisory and structuring problem. It requires professionals who can sit in a sovereign capital like Abuja, Accra, or a Central African finance ministry, across the table from a government under pressure, and find the transaction architecture that works for both sides.

“That is a rarer skill than it appears. It cannot be learned from Geneva or London. It is learned in the room.”