The World Bank has warned that 23 African countries are currently in or at high risk of debt distress as governments across the continent struggle to stabilise public finances after years of economic shocks.
In its latest Africa Pulse report, the bank said that almost half of Africa’s nations are facing severe debt sustainability challenges, compared to just eight countries a decade ago.
The institution cautioned that while the region has shown greater economic resilience than previously expected — with growth projected at 3.8 percent in 2025, up from 3.5 percent last year — fiscal risks remain high due to heavy debt servicing obligations and declining external aid inflows.
“Debt distress has become a pressing concern for Africa. The combination of weak revenues, high debt levels, and limited fiscal space constrains investment in critical infrastructure and social services,” the bank stated.
Mounting Fiscal Pressures
Many African economies have struggled to recover from the combined effects of the pandemic, commodity price volatility, and tight global financial conditions that have made access to international capital markets more expensive.
The World Bank noted that rising debt obligations have crowded out social and infrastructure spending, while exchange rate depreciation in several economies has further increased the local cost of foreign-denominated debt.
According to the report, the average debt-to-GDP ratio across Sub-Saharan Africa has risen sharply since 2014, leaving several governments vulnerable to external shocks.
The lender urged countries to adopt fiscal consolidation measures, improve tax collection efficiency, and strengthen public debt management frameworks to mitigate default risks.
Economic Reforms Showing Results
Despite these fiscal challenges, the bank observed signs of macroeconomic improvement across the region. Inflation has eased in most countries, several currencies have stabilised or appreciated against the U.S. dollar, and governments have started implementing tighter borrowing discipline.
The report also credited ongoing reforms under President Bola Tinubu’s administration in Nigeria, including fuel subsidy removal, foreign exchange unification, and enhanced fiscal transparency, for helping to restore investor confidence in Africa’s largest economy.
“We’re seeing governments across Africa manage their public finances more responsibly, even as overseas aid declines,” said Andrew Dabalen, World Bank Chief Economist for the Africa Region.
Protest Movements and Reform Risks
The World Bank, however, cautioned that public discontent linked to weak job creation, high living costs, and tax reforms could stall fiscal consolidation and delay structural reforms.
Recent demonstrations in Madagascar, Kenya, and Nigeria were cited as examples of growing youth frustration over limited economic opportunities, governance lapses, and the rising cost of living.
The bank emphasised that maintaining social stability will be essential for sustaining investor confidence and ensuring that economic reforms deliver tangible results.
“These protest movements, while driven by genuine economic concerns, can sap revenues and complicate debt management,” the report said.
The Path Forward
The World Bank recommended that African nations prioritise policies that enhance private investment, boost export diversification, and promote domestic capital mobilisation to strengthen resilience against external shocks.
It also urged regional governments to work closely with international creditors to restructure unsustainable debt and avoid the accumulation of new non-concessional loans that could worsen fiscal fragility.
The report concluded that although Africa’s economies have shown the capacity to weather global disruptions, without decisive action to stabilise debt and expand revenue, fiscal distress could derail the continent’s long-term growth trajectory.