Africa’s public debt has almost doubled since 2010, with debt servicing costs now consuming almost 30% of government revenues — money that should be building schools, hospitals and climate resilience. This isn’t just a financial crisis; it’s a development emergency that threatens to derail Africa’s progress for a generation.
SA’s hosting of the G20 is preceded by Indonesia, India and Brazil. This is a good moment to launch an ambitious yet practical strategy to address the issues of debt and the rising cost of capital.
The expert panel appointed by finance minister Enoch Godongwana to help SA and the AU make inputs into the G20 summit in November will use this as an opportune moment for such a strategy to be tabled. Chaired by former finance minister Trevor Manuel, with the Mapungubwe Institute for Strategic Reflection providing secretariat and research support, the 27-person strong panel has 21 people from different parts of Africa. Its immediate aim is to present its recommendations to the G20 finance ministers meeting that precedes the summit.
The roots of Africa’s debt crisis lie in decisions made after the 2008 global financial crisis. When central banks in wealthy countries flooded their economies with cheap money, capital flowed to African markets seeking higher returns. More countries could access international capital markets through bond issuances rather than relying solely on traditional aid. That was the good news — until it was not good any more.
Bond financing proved more expensive than concessional lending, while shortened debt tenures intensified rollover risks. Meanwhile, non-Paris Club lenders, particularly China and the Gulf states, expanded their lending to African governments. This created a more complex creditor landscape, which the normal debt resolution mechanisms were unable to handle.
The Covid-19 pandemic and subsequent global economic shocks exposed these vulnerabilities. Rising interest rates, slowing growth and volatile commodity prices resulted in countries that had borrowed during the boom years struggling to service debts that had become more and more expensive. The immediate effect of this can be seen by governments being forced to prioritise debt payments over basic needs.
The G20’s Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative, agreed on in 2020 when Saudi Arabia hosted the summit, has proved painfully slow and limited in scope. Zambia, Chad, Ethiopia and Ghana entered the common framework process years ago, yet negotiations drag on with little progress. The framework excludes lower-middle-income countries such as SA, with access to private capital markets, leaving some of Africa’s most dynamic economies without support options.
Among the proposals shaping thinking as we head for the G20 summit and beyond are:
- An overhaul of the G20 common framework, with access being extended to all middle-income countries.
- “Bailing in” private creditors rather than them being bailed out, with parallel rather than sequential negotiations ensuring fair burden-sharing.
- Development of a comprehensive debt refinancing initiative for low- and lower-middle-income countries, including refinance obligations at more sustainable terms, and mandatory private sector participation. This would allow for additional fiscal headroom, which could be directed towards development and climate investments.
- Critically, there is a need for a “borrowers’ club” as a forum for sharing knowledge, promoting responsible borrowing practices, and amplifying the collective voice of debtor nations in international negotiations.
All of this is not to suggest that African countries themselves are not pulling themselves up by the bootstraps and doing something. For example, Nigeria’s Investment & Securities Act of 2025, its most comprehensive capital markets reform in nearly two decades, explicitly recognises digital assets and aims at strengthening regulatory frameworks.
Kenya has pursued comprehensive capital market reforms, including demutualisation of the Nairobi Securities Exchange and introduction of real estate investment trusts and derivatives markets, helping deepen domestic capital markets. SA has implemented exchange control reforms that allow multicurrency listings and non-rand collateral for derivatives, making its markets more competitive internationally.
Without bold action to reform the international debt architecture and support countries in building domestic financing capabilities, Africa risks losing another development decade.
• Abba Omar is director of operations at the Mapungubwe Institute for Strategic Reflection.
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