South Africa, Egypt, Nigeria, Morocco and Mozambique are the African countries with the highest external debts as of 2022, a BusinessDay analysis from the latest international debt report shows.
The report by the World Bank said South Africa’s external debt stood at $172.1 billion. Egypt owed $163.1 billion; Nigeria, $98.3 billion; Morocco, $64.7 billion; and Mozambique $64.0 billion.
The rest on the top 10 list were Angola ($60.1 billion), Ghana ($44.8 billion), Kenya ($41.6 billion), Tunisia ($39.7 billion) and Senegal ($32.1 billion).
“Over the past decade, low-income countries accumulated external debt at a faster rate than middle-income countries. The debt stock of low-income countries increased by 109 percent from 2012 to 2022, whereas gross national income rose 33 percent,” the report said.
It said in middle-income countries, external debt stock rose 58 percent, only moderately more than the gross national income, which increased by 51 percent.
The report also revealed that the five African countries with the least external debt were Comoros ($368.7 million), Sao Tome & Principe ($391.5 million), Eritrea ($715.3 million), Burundi ($954.3 million) and Central Africa Republic ($1.02 billion).
The Washington-based global lender projects that debt servicing costs on public and publicly guaranteed debt will grow by 10 percent for all developing countries from 2023 t0 2024 and by nearly 40 percent for low-income countries.
It said developing countries spent $443.5 billion to service public debt in 2022 amid a surge in interest rates, adding that the rise in borrowing costs had diverted scarce resources away from critical needs such as education, health, and the environment.
“Amid the biggest surge in global interest rates in four decades, developing countries spent a record $443.5 billion to service their external public and publicly guaranteed debt in 2022,” it added.
“Debt-service payments which include principal and interest increased by five percent over the previous year for all developing countries.”
According to the authors of the report, the cost of servicing external debt from last year to 2024 is expected to rise significantly compared to the previous two years, and the cost for low-income countries is projected to be much higher still.
They said: “These projected increases in debt service will take place against a backdrop of rising global interest rates and largely unfavourable exchange rate movements.
“Servicing external debt could therefore become increasingly burdensome for many countries in coming years and could crowd out spending on other priorities.”
The multilateral lender said the 75 countries eligible to borrow from its International Development Association, which supports the poorest countries, paid a record $88.9 billion in debt-servicing costs in 2022.
It said over the past decade, interest payments by these countries have quadrupled to an all-time high of $23.6 billion in 2022.
“Overall debt-servicing costs for the 24 poorest countries are expected to balloon in 2023 and 2024 by as much as 39 percent.”
The Bretton Woods institution which comprises the World Bank and the International Monetary Fund, said rising interest rates had made all developing nations more vulnerable to debt.
“There have been more sovereign defaults in the last three years than in the entire preceding two decades, affecting ten developing nations,” the World Bank said, adding that approximately 60 percent of low-income nations were in or at high risk of entering debt distress.
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