A report by Afreximbank reveals that African countries’ defaulted loans hit a record $149.4 billion in 2022, driven by rising borrowing costs and global crises, including the COVID-19 pandemic and the Russia-Ukraine war. East Africa tops the continent’s indebtedness, with Kenya and Tanzania leading in loan defaults. According to the study, the region recorded a debt-to-GDP ratio of 54.5% from 2017 to 2023. The defaults have led to financial crises and a decline in investor confidence, with over half of the 52 countries assessed either at high risk or in debt distress. Tanzania and Zimbabwe have significant defaults to private creditors, while Sudan, Zimbabwe, and Zambia lead in defaults to official creditors like the Paris Club. Although defaults declined by 13% in 2023 as countries restructured their debts, Africa’s growing reliance on private creditors poses challenges to debt sustainability, with private debt now accounting for over half of the continent’s external debt.
SOURCE: EAST AFRICAN
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