In recent years, Africa has faced a severe debt crisis due to various factors such as rising energy and food costs, falling raw material prices, and poor governance. Zambia, a resource-rich country, declared insolvency with a national debt of 129% of GDP in 2020, exacerbated by high imports, droughts, and large foreign loans, mainly from China. Similarly, Ghana suspended debt payments to avoid bankruptcy, negotiating a $13 billion debt relief deal in 2024, the largest in African history.
Negotiations with creditors, including China and Western nations, have become vital for countries like Chad, Ethiopia, and Kenya seeking relief. However, conflicting interests between China and the West pose challenges in finding solutions. Furthermore, negative media portrayals have led to higher borrowing costs for African countries, impacting their credit ratings.
Key Solutions and Concerns:
Amid a growing debt crisis in sub-Saharan Africa, the World Bank and IMF have expressed concerns. Strong advocacy for fair representation, debt relief, and cautious borrowing practices is needed to harness Africa’s economic potential while addressing its debt burden. Multilateral solutions involving China and strategic debt restructuring are essential for sustainable development in the region.