(Ecofin Agency) - • Sub-Saharan African countries are set to pay about $20 billion in interest on public external debt in 2025.
• Interest payments will account for 3.4% of the region’s combined GDP between 2025 and 2027.
• Twenty countries spent more on debt payments than on health and education combined in 2024.

Sub-Saharan Africa will pay around $20 billion in interest on public and publicly guaranteed external debt in 2025, the World Bank said in a report released on April 23, 2025.

The "Africa’s Pulse Spring 2025" report notes that a shift in the mix of creditors has pushed up both interest payments and principal repayments across the region. Bondholders, the Chinese government, and private lenders will account for nearly 75% of all interest payments this year.

On average, interest payments are expected to represent 3.4% of the region’s total GDP over the 2025-2027 period. Public debt service — covering both domestic and external debt — more than doubled before the COVID-19 pandemic, rising from 16% of government revenues in 2012 to 39% in 2019. It has since stabilized at a record level of about 50% of revenues in 2024.

Thanks to debt restructuring and refinancing efforts, total public debt service could start declining this year, although the future path remains uncertain. Governments will still need to carry out liability management operations, strengthen fiscal balances, and push forward with growth-focused reforms to ease debt levels and related risks.

The region’s public debt-to-GDP ratio reached 63.2% at the end of 2024

The rise in external public debt service is linked to a broader base of creditors, including non-Paris Club governments and private lenders, especially bondholders. African governments pay widely different interest rates depending on the creditor. The average interest rate on sovereign bonds is about six times higher than the rate on multilateral loans.

This heavy debt burden is eating into essential public services. In 2024, 20 out of 48 countries in Sub-Saharan Africa spent more on servicing debt than on healthcare and education combined.

The World Bank report also highlights a sharp drop in net financial flows to the region. Since 2016, principal repayments on public external debt have outpaced disbursements, causing net financial inflows to shrink dramatically. Net external debt flows to Sub-Saharan Africa fell from an annual average of $37.7 billion between 2016 and 2019 to just $18.4 billion in 2023.

As Chinese lenders and bondholders pulled back, shifting from inflows to net outflows in the early 2020s, multilateral loans surged. Multilateral institutions have provided about 80% of all financing flows to the region since the pandemic.

The report points out that public debt in Sub-Saharan Africa has been on a steady upward trend over the past decade. After the major relief programs under the Heavily Indebted Poor Countries Initiative and the Multilateral Debt Relief Initiative, a mix of favorable global financial conditions and growing investor appetite for risk opened the door to fresh borrowing.

A big part of the recent debt increase comes from domestic debt. According to recent data from the World Bank and the International Monetary Fund’s Low-Income Country Debt Sustainability Framework, the median ratio of domestic public debt to GDP jumped from 8.2% in 2012 to 21.6% in 2022, before falling slightly to 19.6% in 2024.

Walid Kéfi