An article by: Ahmed Moustafa


African indebtedness is a growing concern as the continent faces economic stress due to growing debt. Many African countries are burdened by high levels of debt from foreign creditors and multinational corporations, which have led to financial instability and economic hardship. Studies reveal that many African countries are owed more money than their GDP and exports, resulting in reduced access to external finance and eroding foreign investment. Economic growth and investment in public services and social protection schemes have also been restricted. To address this, efforts are being made to tackle unsustainable borrowing, reform debt management strategies, and invest in poverty reduction measures. External creditors must ensure their loans contribute to sustainable development and not exacerbate the debt crisis. It is crucial to hold those in power accountable for their decisions regarding borrowing and lending, and all parties involved to act responsibly.

The Roots of Africa’s Indebtedness

To grasp the complexities of Africa’s debt crisis, it is essential to examine its historical roots. The colonial legacy has played a significant role in shaping Africa’s indebtedness. During the colonial era, African nations were exploited for their resources, leaving them with limited infrastructure and weakened economies. This laid the foundation for future economic challenges and debt accumulation. Additionally, the implementation of Structural Adjustment Programs (SAPs) in the 1980s exacerbated Africa’s debt burden. These programs, imposed by international financial institutions, required African countries to adopt economic policies that often led to increased borrowing to meet the demands of the global market. As a result, many African nations found themselves trapped in a cycle of debt, struggling to repay their loans.

Current Debt Crisis: Examining the Magnitude and Causes

Africa’s current debt crisis is a cause for concern due to the alarming levels of debt incurred by many countries on the continent. The total debt of African countries has reached unprecedented levels, surpassing $1 trillion. This has raised questions about the sustainability of debt repayment and the impact it may have on the economic well-being of African nations. Limited revenue generation, insufficient domestic resource mobilization, and overreliance on external financing are among the key causes. Mismanagement of funds, corruption, and unfavorable global economic conditions further exacerbate the problem. It is crucial to address these underlying causes to prevent further escalation of the debt crisis.

Why Africa now is the focus of the global powers despite indebtedness?

Africa has gained significant attention from global powers due to its rapid economic growth, abundant natural resources, and potential for business growth. With half of the world’s remaining oil and gas reserves, Africa’s agricultural sector offers significant potential for the global food market. The continent’s affluent countries and open economies make it an attractive investment option. The continent’s large population of 1.4 billion provides a steady pool of labor and resources for potential investors. The continent’s untapped potential for business growth is also tapped into by its large population. Despite its reputation for being heavily indebted, Africa’s decreasing debt levels have made it an optimal investment climate. This, combined with continued economic growth and opportunities, has made Africa an attractive option for investors worldwide. As a result, many global powers have invested significant resources in Africa, seeing high returns on their investments.


African indebtedness between global rivals the West and China

African indebtedness is exposed to foreign competition from the West on the one hand and from China and new powers on the other, raising legitimate concerns. The West is still the largest source of foreign direct investment in Africa, with the total value of investments more than doubling in the past two decades. However, Chinese investments have been on the rise, with Chinese loans to African countries now totaling more than $250 billion. As a result, African indebtedness is now facing competition from a multitude of sources, most importantly from China and other emerging economies. Chinese investments are often attractive to African countries due to the large amount of funds available as well as low-interest loans, subsidies, and other incentives. In addition, the rapid growth of Chinese and other foreign investments in Africa has created new economic opportunities, such as infrastructure projects such as ports, highways, and power stations. However, it has also led to the increased indebtedness of African countries due to the lack of transparency and lack of rigorous financial management in the region. The high levels of borrowing by African governments have had an impact on the stability of their currencies and economies, making them vulnerable to global rivals.

Samir Amin views the dilemma of African indebtedness

Dr. Samir Amin, an Egyptian-born developmental economist, political scientist, and editor of African Perspectives Magazine, has been a significant figure in the African scholarly community for over three decades. He is a co-founder and ex-president of the Council for the Development of Social Science Research in Africa (CODESRIA), which prioritizes African voices in social science research. Amin believes that African nations should control their economic and political destiny by reducing reliance on foreign aid and social investment. He argues that current economic and social models are insufficient to address persistent poverty and inequality and call for greater economic autonomy, factor endowment democracies, and regional development. Amin has also played a role in the emergence of a strong and independent African scholarly community and Centres of Excellence in African institutions. He believes that Africa’s economic indebtedness is a result of a long-term process of colonization, dispossession, and unfair trade, leading to a debt that African countries cannot repay. Amin argues that the debt burden cannot be entirely assigned to the debtors due to oppressive policies and foreign interests. He believes that Africa’s debt cannot be resolved without massive debt cancellation for impoverished countries and a new, fairer system of global governance and financial arrangements.

Is it possible to end up the African indebtedness dilemma? And how?

The African indebtedness problem is a complex issue that requires a multifaceted solution. The G20’s Debt Service Suspension Initiative, launched in 2018, has helped African countries acquire funds for public expenditures. International financial institutions can offer grants and low-interest loans to support infrastructure development, businesses, healthcare, education, and economic growth. Reforming the global financial system, enhancing transparency and regulatory mechanisms, and increasing African representation in international forums can also help reduce debt accumulation. To end the African indebtedness dilemma, a combination of these solutions is needed, including reforming the global financial system, enhancing transparency and accountability, canceling debt, and increasing access to grants and low-interest loans.

Can AI and Digitization settle a part of African indebtedness?

The increasing use of Artificial Intelligence (AI) in Africa is crucial to address the country’s debt crisis. AI can analyze vast datasets of economic and financial information, helping governments predict and manage economic fluctuations. It can also improve the efficiency of traditional debt restructuring procedures, allowing African countries to manage and reduce their debt while freeing up capital for development. AI can also improve financial inclusion, granting access to capital markets that were previously inaccessible. Africa is among the most indebted countries globally, and AI/digitization solutions can enable riskier and untraditional debt payment models. By enabling cost savings in sectors like healthcare, manufacturing, infrastructure, and digital security, some of Africa’s indebtedness can be settled. Africa should seek support from transnational organizations and AI-cutting-edge countries, who have been major beneficiaries of IMF and World Bank financial support over the past three decades. According to the most recent reports from the International Telecommunication Union, there are approximately 500 million African citizens who do not yet have a digital identity. This may pique the interest of many digitization companies worldwide to work in this field. The (DotAfrica) initiative can be worked on to minimize this number.

Sino combating poverty experience can help Africa to reduce its indebtedness

China’s successful economic reforms nearly 40 years ago, led by Deng Xiaoping, have significantly reduced poverty in China. Despite Sino income per capita being comparable to some of the poorest countries in Africa, China implemented throughout the past 40 years aggressive measures and sustained investments in infrastructure and education to alleviate poverty. Today, China is one of the world’s leading economic powers and has one of the largest middle classes. Its growth is attributed to increased domestic investment and strong foreign investments, leading to the lifting of over 800 million people out of poverty. African countries can learn from China’s success by developing infrastructure, empowering citizens through a productive micro-credit system, and seeking foreign investment while protecting their resources. If executed correctly, African countries can generate enough economic growth to reduce debt burdens and improve living standards, similar to China’s approach. The Chinese combating poverty experience is a valuable resource for African countries to use to reduce indebtedness and improve their economies.


In conclusion, Africa’s debt situation demands urgent attention and comprehensive solutions. The continent’s history, coupled with external factors, has contributed to its current predicament. The impact of high levels of debt on African economies is evident, hindering progress and impeding development efforts. However, through international aid, debt relief initiatives, and improved governance, there is hope for a sustainable path forward. By exploring innovative financing mechanisms, strengthening domestic resource mobilization, and promoting economic diversification, Africa can overcome its debt challenges and pave the way for a brighter future. It is imperative that stakeholders and policymakers work together to address this dilemma and ensure the long-term prosperity of the continent.

Director of the Center for Asia Studies

Ahmed Moustafa