President of the Africa Development Bank, Akinwumi Adesina has revealed that Africa’s debt to GDP ratio which has stood stable at 60% has risen sharply to between 70-75%. According to him, the bulk of the debt has been for private bond issuances on the global capital markets — Eurobonds. As countries’ currencies devalued and external reserves plummeted, in the face of declined economic activity, many African countries face risks of debt distress.

Out of 38 African countries for which Debt Sustainability ratings are available, 14 are in high risk of debt distress, while 6 are already in debt distress.

Speaking during the Federal Inland Revenue Service Tax Dialogue in Nigeria, Dr. Adesina said Africa which was projected to be amongst the fastest growing economies in the world has experienced a decline in growth due to the coronavirus pandemic.”Before the pandemic, 6 of the 10 fastest growing economies in the world were in Africa. With the pandemic shock, growth plummeted. Africa’s GDP growth declined by 2.1% last year, the worst in two decades. As economies went into lockdowns, people’s incomes declined, millions lost their jobs, trade volumes fell, and demand for goods and services declined. Cumulative loss to Africa’s GDP is estimated at $173-236 billion for 2020 and 2021, respectively”.

The AFDB President also outlined the challenges facing Nigeria’s economy which is reeling under falling oil prices.” Nigeria has not been spared. The economy shrunk by 3% in 2020 on account of falling oil prices and effects of the lockdowns on economic activity. The pandemic has impacted budgetary balances and increased debt burdens. Nigeria’s Debt-to-GDP ratio will push debt service payments beyond more than 60% of federally collected revenues. With shrinkage in oil revenues, debt service payments pose the greatest risk to Nigeria”.

He was however confident that Africa will soon recover from the crises.”African economies are projected to recover this year. The African Development Bank projects that GDP growth will recover to 3.4% for Africa, as economies open up, commodity prices recover, tourism bounces back, and global value chains recover their manufacturing capacities” Dr. Adesina said.