Africa’s Crippling Debt Burden On Full Display At Eventful Johannesburg G20 Summit

Banging a wooden gavel on a block like a judge, South African President Cyril Ramaphosa declared the end of the G20 Summit in Johannesburg earlier this week.

“This gavel of this G20 summit formally closes this summit and now moves on to the next president of the G20,” declared Ramaphosa. Tradition dictates the gavel should have been handed over to next year’s host, but the United States of America, under the leadership of Donald Trump, did not attend this year’s summit in South Africa.

Trump barred US officials from attending after claiming that South Africa’s black majority is persecuting its white minority, an accusation the South African government denies vehemently. Trump has even made comments implying that South Africa, the only African member of the bloc (barring the AU), should not be part of G20.

Aside from the US President’s latest controversial opinions, his administration’s absence was glaring, particularly in light of the pressing need to advance solutions for urgent global and regional issues.

Yet, South Africa did not back down from pushing global leaders at the summit to reach a consensus on these issues and making a major declaration at the end of the summit.

This year’s summit touched on a number of topics, chief among them were global debt injustice, Africa’s falling victim to an international financial architecture designed by wealthy countries, and why developed countries are reluctant to change the system.

The rising debt burden has become the fabled Stone of Sisyphus for the global south, as developing nations exert monumental effort to realize economic growth and social progress while grappling with the realities of mounting debt.

Global public debt levels have soared, reaching a record of USD 92 trillion, and are set to exceed USD 100 trillion by the end of the year. Developing countries face rising debt service costs as a result.

Africa in particular is spending up to USD 164 billion in debt servicing in 2024, with 25 out of 54 African economies spending more on interest payments than on health and food security.

The widening debt crisis largely emanates from a flawed international economic framework characterized by a rules-based system developed and historically dominated by developed countries that hold disproportionate voting power bases and influence in key decision-making processes, which do not favor Africa’s transformation and development needs. 

The existing global debt architecture, including the G20 Common Framework, is creditor-led and inadequate to solve Africa’s debt crisis, observers argue.

The G20, formed in 1999 by sovereign countries as well as the EU and AU as singular members, was intended to resolve major outstanding global problems.

The G20’s Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI), known as the Common Framework (CF), was launched in November 2020 in the wake of mounting economic pressures amidst the COVID-19 pandemic.

Its purported aim is to strengthen the international debt architecture for the world’s poorest countries. The framework provides a support structure for official creditor coordination to facilitate timely, orderly, and durable debt treatment and to forge the principles of fair burden-sharing across official and private sector creditors.

Sub-Saharan Africa is facing a very challenging debt situation. In the last decade, debts owed by African governments to creditors have increased significantly. African external debt was more than a trillion dollars in 2024, compared to just half that in 2020.

According to the UN, globally, over two thirds of low-income countries (many of which are in Africa) are either in debt distress or at a high risk of it. According to an assessment by the IMF, the average total public debt ratio in Sub-Saharan Africa has almost doubled in just a decade—from 30 percent of GDP at the end of 2013 to almost 60 percent of GDP by end of 2024, and the ratio of interest payments to revenue has more than doubled since 2010.

More money is going into debt servicing than priority expenditures for many countries. About 3.4 billion people live in countries that spend more on public debt interest payments than on either education or health. Due to expensive borrowing and the proliferation of shocks— pandemics, Ukraine war, climate shocks—Sub-Saharan Africa is facing an unprecedented situation.

The G20 CF managed only a fraction of the outstanding debt. In Africa, the topic is acute: with the IMF warning that some 20 African countries were in or at high risk of debt distress.

In the past five years, just four countries requested the G20 Common Framework Debt Treatment. These are Zambia, Ghana, Ethiopia, and Chad. The process for each of these countries has suffered delays, often related to limited private sector participation.

Two of the four countries, Ghana (USD 9.3 billion) and Zambia (USD 4.3 billion), have secured debt relief while Ethiopia and Chad are left waiting.

The mechanism’s “very mixed track record” has led eligible low-income countries, including African states like Kenya and Sudan, to avoid applying and continue debt repayments.

Senegal emerged as a flashpoint after billions of dollars in undisclosed borrowing prompted the IMF to freeze a USD 1.8 billion program and triggered a sharp ratings downgrade.

Gabon has turned to liability-management deals to ease repayment pressure, including regional bond swaps worth about USD one billion. Mozambique has sought advisers for a restructuring, while Malawi’s debt levels are nearing 90 percent of GDP. IMF and WB warn African economies to maintain their debt-to-GDP ratio below 60 percent.

At the end of the G20 summit, participating world leaders issued a declaration that exposed the grim realities facing the debt-burdened developing world.

“We meet against the backdrop of rising geopolitical and geo-economic competition and instability, heightened conflicts and wars, deepening inequality, increasing global economic uncertainty and fragmentation. In the face of this challenging political and socio-economic environment, we underscore our belief in multilateral cooperation to collectively address shared challenges. We note with distress the immense human suffering and the adverse impact of wars and conflicts around the world,” reads the declaration.

It details that developing nations, especially in Africa, are facing huge deficits in financing basic public services and development finance, as their economies are drained by debt servicing.

“We are aware that over 600 million Africans have no access to electricity, with an average access rate of 40 percent for African countries being the lowest in the world and an estimated one billion people in Africa lack access to clean cooking. We are deeply alarmed that two million Africans lose their lives each year due to the absence of clean cooking fuels in households. While we welcome progress made in reducing hunger in the world, we are still alarmed that up to 720 million people continued to experience hunger in 2024 and that 2.6 billion people were unable to afford healthy diets. We commit to strengthen our efforts in the fight against illicit financial flows (IFFs) noting that at least USD 88 billion in outflows from Africa is lost every year, undermining domestic resource mobilization efforts,” reads the declaration.

Debt servicing costs have reached unprecedented levels, crowding out vital spending on health, education, climate adaptation, and other development priorities.

According to UNCTAD and the World Bank, public debt in developing countries surpassed USD 31 trillion in 2024, with debt service costs rising by over 10 percent in a single year. Governments are literally defaulting on development in order to honor their debt obligations.

Especially in Africa, reliance on domestic finance remains nascent, hindered by massive illicit financial outflow, which could otherwise bridge Africa’s underfinance, according to UNCTAD.

Ten years after the world embraced the Sustainable Development Goals, progress has stalled. Financing for development is shrinking, climate shocks are intensifying, and multilateral solidarity faces a historic test, as bullying, protectionism, and crude self-interest become the order of the day.

Meanwhile, the old development model has not delivered and is now being dismantled by many of its former supporters. Trade barriers are increasing, and the protections provided by a rules-based system, especially for the least developed countries, are being tested.

Instead of increasing funding, concessional flows are declining, and the broader promise of development finance remains out of reach. Private capital flows to Africa remain limited, volatile, overly expensive, and dominated by debt.

The G-20 Common Framework, which was envisaged to steer the process, has been slow in providing relief, and there is not a clear roadmap for countries. The journey for Ghana, Zambia, Ethiopia, and Chad has been complex and uncertain. The heterogeneous creditor landscape has led to the lack of a proper framework to assess comparability of treatment between creditors. Official creditors have favored maturity extensions with no principal reduction, while private creditors have tended to prefer upfront cash. There is insufficient consideration for debt relief via principal reductions.

Unfortunately, the Common Framework has not performed as expected.

Instead of meeting the huge investment gap, Africa is witnessing a dramatic scaling back of development cooperation, as major development partners turn inward and shift their focus to military spending. Moreover, hopes of development through trade and market access have been dealt a sharp blow by unilateral tariffs that undermine the rules based, multilateral trading system and penalise poor countries.

The USA’s Africa Growth and Opportunity Act has lapsed, and the spectre of the EU’s Carbon Border Adjustment Mechanism looms large.

Alongside these policy-induced income shocks, Africa and low- and middle-income countries generally face significant macroeconomic shocks. Commodity prices have fallen below their long-term trend, and the combination of slower growth and higher global interest rates has increased the risk of debt distress in many nations. Even for those not facing immediate risk of debt default, the rising burden of debt service payments is crowding out essential investments in economic and human development.

Amidst the failure of western instruments, China has emerged as the biggest lender and the largest bilateral creditor for Sub-Saharan Africa, lending more than USD 800 billion in the last two decades, eclipsing the Paris Club.

As part of its overseas push and the Belt and Road Initiative, China has provided loans for infrastructure, energy, transportation, and communications. It has a unique lending style, with many loans secured on commodity exports. Its loans in Africa peaked in 2016 and have since been on a declining path.

China now accounts for more than 10 percent of Su-Saharan African debt. Resource-rich countries such as Angola and Democratic Republic of Congo owe more than 40 percent of their debt to China. Beijing is also the major bilateral, non-Paris Club creditor to Ethiopia, accounting for 30 percent of total external debt.

China has a unique mix of official and private creditors. Its institutional architecture is different from Western countries. China has two major policy banks (China Development Bank (CDB) and China Eximbank), several large, state-owned commercial banks and an export credit and insurance agency, Sinosure.

Historically, China’s foreign lending was provided by CDB and China Eximbank, which are also public creditors. However, since 2015, more than 40 commercial creditors have become involved, including state-owned commercial banks, state-owned enterprises and private companies, and Sinosure.

State-owned commercial banks include the Industrial and Commercial Bank of China (ICBC) and Bank of China. This renders negotiations with the Chinese challenging for African governments and increases transaction costs of navigating the Chinese system.

According to the Boston University Global Development Policy (GDP) Center, China loaned about USD 160 billion to African countries between 2000 and 2016. China’s two global policy banks are rapidly becoming the largest sources of energy finance for governments around the world and eclipsing the multilateral development banks.

Ethiopia

Ethiopia requested debt treatment under the G20 CF in early 2021, when its debt-to-GDP ratio reached an all-time-high of around 53 percent.

Negotiations  between Addis Ababa and its creditors for the restructuring of USD 3.5 billion in debt, have since stalled, primarily due to the country’s deteriorating domestic political situation (Tigray armed conflict) and slow-moving discussions with the IMF on a financing program. Nevertheless, the country and its Official Creditors Committee (OCC) reached an agreement in principle on the main debt treatment parameters in late March 2025.

UNDP Ethiopia, which advises the government on debt management, points out that a debt haircut can free up fiscal space for Ethiopia’s SDG investments.

In September 2025, an IMF and WB joint assessment warned Ethiopia’s debt is unsustainable unless the country reaches an agreement with creditors. It highlights that Ethiopia’s repayment risks are aggravated by “bunching of debt service in the near to medium term” and by the sharp decline in external financing during and after the Tigray war.

The report warns that without successful restructuring and reforms, Ethiopia faces “both liquidity and solvency pressures,” as debt service obligations continue to outpace export revenues and government revenues. Stress tests show the economy remains highly vulnerable to export and depreciation shocks.

In October, Ethiopia’s negotiations with creditors for its outstanding USD one billion Eurobond collapsed.  As in Zambia’s case, the challenge is to find a solution that is acceptable to both private and official creditors.

In the case of Ethiopia, in February 2025, the Eurobond holders argued that since coffee and gold exports are strong, the country is facing a liquidity and not a solvency challenge. They had previously rejected an Ministry of Finance offer to pay USD 800 million or 80 percent of the Eurobond that was due in December 2024.

Following the unsuccessful negotiations to restructure the debt with creditors, Ethiopia is reportedly in talks with China to swap debts it owes Beijing into Yuan-denominated debt instead of the US Dollar.

A Way Forward for Africa?

Seeing the mainstream debt management instruments that have been in place for years are not effective, African leaders have come up with different proposals. These include reforming the G20 Common Framework, restructuring the existing mainstream international financial architecture, and introducing new and effective international and regional financing instruments that are based on the needs and voices of African countries.

Experts argue that the CF is a long, drawn-out process with an uncertain end and no interim relief, making it both challenging for participating countries and discouraging for other countries with serious debt problems. Another perspective argues that almost three years after the initial agreement on the Common Framework, there still is no model for an internationally coordinated restructuring that both delivers significant debt relief and includes the Chinese policy banks. It has also been unable to mediate between creditors and provide a minimum standard for debt relief requirements on private creditors.

According to Indermit Gill, chief economist for the World Bank, the CF has failed to provide a single dollar of new money. Jason Braganza from the African Forum and Network on Debt and Development (AFRODAD) has argued that the G20 CF is a creditor-led initiative with the objective of guaranteeing creditors get paid.

Given the slowness in debt restructuring, multilateral financing is increasingly used to repay private creditors. Amid such criticism, it is important to think of ways to reform the system.

Another layer of complexity has been the different mindsets and approaches among creditors. Paris Club and China prefer maturity extensions, while private creditors favor immediate cash flows with the possibility of debt write-downs, depending on the country’s case.

The AU Lomé Declaration on Debt, adopted in May 2025, resolved “to advocate for reforming the G20 Common Framework by setting up a universally accepted methodology for comparability of treatment, enhancing transparency and inclusivity amongst stakeholders during restructuring”.

The G20 Africa Expert Panel for the G20 Leaders’ Summit in South Africa, has issued a document dubbed ‘Growth, Debt and Development: Opportunities for a New African Partnership’ that stipulates a range of alternative mechanisms to resolve Africa’s debt complications.

“Some of our proposals offer immediate opportunities for progress, while others call for the sustained effort needed to achieve lasting transformation. The simplest and easiest actions seek to create a better environment for African infrastructure finance; while returns on investments in Africa often exceed those in developed economies, investors are deterred by regulatory barriers and distorted perceptions of risk,” reads the document.

The South African Presidency of the G20 offered an opportunity to build momentum behind a stronger African voice in global affairs. The Africa Expert Panel was appointed by the South African Minister of Finance to prepare an independent report for G20 leaders to advise on the collective actions needed to realize the global potential of Africa’s development.

The G20 is requested to help with several agendas, including swift action to reduce investment costs by increasing project transparency. Simple adjustments to global banking regulations could unlock more finance for infrastructure and development, according to the panel.

Credit rating agencies (CRAs) hold considerable power to shape borrowing costs and must be held accountable. Transparency in sovereign lending must involve both debtors and creditors, also requested by the panel. Given the IMF’s significance for financial stability and development on the African continent, and the continued absence of an effective African voice in the Fund, the panel suggests an independent review of the IMF.

African countries account for about 40 percent of IMF loan commitments and are subject to the conditions attached to those loans. A comprehensive Africa-focused review of the IMF can ask how the G20 can help to make it work better for the continent and the world, according to experts.

Over the life of the G20, there have been notable changes in the global financial architecture. New multilateral financial institutions have been established regionally, including a new wave of African multilateral finance agencies. Additionally, new entities have emerged at regional and cross-border levels to tackle financial stability challenges. These include the Chiang Mai Initiative, the BRICS’ Contingent Reserve Arrangement, the African Financial Stability Mechanism, and the African Monetary Fund.

These developments have occurred without careful review by the international community of their implications for the effectiveness and equity of the international financial system.

The panel urged that a new strategy for global development is essential.

Delivering key demands to G20 members, Prime Minister Abiy Ahmed urged the bloc to strengthen the Compact with Africa 2.0 Trust Fund, expand guarantees, and blend finance to unlock private capital.

Furthermore, he urged the G20 to advance timely and profitable debt relief under the Common Framework, support deeper capital markets, improve credit ratings, and also champion African integration from AfCFTA to cross-border infrastructure and digital connectivity.

“It’s important that we find solutions and not just tinker at the margins,” said Trevor Manuel, former South African finance minister and chair of the G20 Africa Expert Panel.