(Ecofin Agency) - Debt payments are expected to keep declining in the coming years, freeing up more room in national budgets for crucial investments in sustainable development goals like quality education and better access to healthcare.

African countries are expected to pay $88.71 billion in external debt service in 2025, a 13% drop from the $102.59 billion projected for 2024, according to a report by ONE Campaign, an international NGO focused on fighting extreme poverty and preventable diseases.

The report, titled African Debt Overview, highlights that 2024 marks the end of a long period of rising debt payments across the continent, a trend that began in 2009. The decline is expected to continue through 2029, when total external debt payments—including interest and principal—are projected to fall to $63.12 billion.

This downward trend is mainly driven by lower interest rates, a more favorable economic environment, improved credit ratings for several African nations, and progress in debt restructuring efforts.

The expected drop in debt service could free up much-needed funds for key sectors like health and education, which are essential for economic growth and human development.

According to the report, Africa’s external debt has surged from $220.51 billion in 2009 to a record $685.47 billion by the end of 2023—equivalent to 24.5% of the continent’s combined GDP. This sharp increase is due to rising financing needs, fueled by rapid population growth, underdeveloped local capital markets, and global crises such as the COVID-19 pandemic and the Russia-Ukraine war. As a result, 20 low-income African countries are either already in debt distress or at high risk of falling into it.

The composition of Africa’s debt has also shifted significantly. Private creditors now hold 43% of the continent’s total external debt, compared to 34% for multilateral lenders like the IMF, World Bank, and African Development Bank, and 23% for bilateral creditors.

China has become Africa’s largest bilateral lender, with $62.86 billion in outstanding loans as of the end of 2023—far ahead of France ($15 billion), Saudi Arabia ($11.85 billion), Kuwait ($9.62 billion), and Germany ($9.48 billion).