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Africa's rising debt: how to avoid a new crisis

Briefing/policy papers

Written by Shakira Mustapha, Annalisa Prizzon

Almost 40% of countries in sub-Saharan Africa are in danger of slipping into a major debt crisis. The number of countries at high risk of debt distress – 18 in all – has more than doubled since 2013, while eight countries are already in distress.

This briefing note offers policy-makers and practitioners an overview of the risks faced by sub-Saharan African countries as they try to keep their debt on a sustainable track, particularly the challenges relating to relatively new sources of finance. Based on this evidence, we recommend critical reforms for both borrowers and lenders to ease vulnerabilities and build resilience into debt management.

Key messages:

  • Responsible debt management requires transparency and information-sharing among borrowers and lenders, but this remains a challenge, exacerbated by the rise of new lenders and more complex types of debt financing.
  • State-contingent debt instruments with official sector support from lenders can build fiscal resilience to exogenous shocks.
  • Further strengthening debt management capacity and analytical tools for debt management in sub-Saharan Africa remains a priority, and requires up-front country ownership and political commitment, as well as commitment from donors and technical assistance providers.
Shakira Mustapha and Annalisa Prizzon