Africa enjoys significant economic momentum heading into the 2020s. The past two decades have seen a doubling of public capital in sub-Saharan Africa, led by Kenya and Gabon; access to electricity has expanded by as much as 50%; and the region has recorded some of the best growth rates in the world, growing by 5% on average from 2010-2014.

Yet even with this impressive performance, the region still lags behind its global peers: infrastructure deficits remain pronounced, with access to critical finance increasingly pushed toward high-yield vehicles; growth is wildly disparate among regional economies; governments are spending more than they take in, with an increasing amount of expenditures going toward debt servicing; and debt-to-GDP levels continue to tick upward toward dangerous levels. This last point is of particular concern heading into 2020, as many Sub-Saharan African (SSA) economies remain undiversified and commodity-focused, leaving them particularly vulnerable to global shocks.

Debt levels in Sub-Saharan Africa

According to Kristalina Georgieva, the managing director of the International Monetary Fund, some 20 of African countries are either at or close to debt distress levels, which by definition means they are at risk of not being able to fulfil their debt servicing obligations.

According to the Fund, public debt stands at around 55% of GDP on average across the region, and this outlook is deteriorating due to persistent budget deficits, notably in South Africa (5.9% of GDP in 2019/20), Nigeria (1.5% of GDP), Uganda (8.7% of GDP), and Kenya (6.2% of GDP).

Debt levels have been growing across-the-board in recent history, but it’s the commodity-reliant economies that have been hit particularly hard, mainly those reliant on oil exports. For them, debt-to-GDP doubled between 2013-2016, the period that coincided with the bottom falling out on global oil prices.

Their leveraging traces familiar arc: as countries’ debt-servicing costs rise, so too is their borrowing as governments struggle to make up for the lost revenue, often in pursuit of developmental or capital expenditure goals, ultimately resulting in ballooning debt-to-GDP ratios. This is also happening against the backdrop of stagnant or reduced developmental assistance from advanced economies, as net ODA inflows have declined by about 2% relative to GDP since the mid-2000s.