Africa’s debt surged to a historic $1.8 trillion, raising significant concerns among economists and policymakers across the globe even as some are still calling for more borrowing.

However, they say that borrowing must be intentional not reckless, and that the resources must be channelled to key areas including infrastructure, education, and industrial capacity so as to spur growth.

New figures from the African Development Bank (AfDB) reveal that the continent’s debt has grown by 170 per cent since 2010, with external interest payments expected to reach $20 billion in 2025. For sub-Saharan Africa, this statistic alone equates to 3.4 per cent of gross domestic product (GDP), straining budgets and threatening development progress leading to some countries being asked to go slow on borrowing or borrow less.

According to George Kabongah, an economist, countries should reduce their borrowing appetite. “Let’s now focus on renegotiating for long-term repayment periods,’’ he suggests.

Data shows how debt is heavily concentrated in the continent’s largest economies with Egypt and South Africa accounting for nearly 30 per cent of Africa’s external liabilities.

On the other hand, Nigeria, Angola, Kenya, Morocco, Ghana, Mozambique, Tunisia, and Sudan comprise most of the remainder thus re-affirming how indebted the industrialising countries are. Private bondholders now own 54 per cent of Africa’s external debt, up from just 18.8 per cent in 2008 — making African economies more vulnerable to global interest rate shocks and capital market volatility.

As the 32nd Afreximbank annual meeting closed in Nigeria, respected economists treated calls to reduce debt with caution.  “Africa needs more debt, not less debt,” Prof Jeffrey Sachs, a world-renowned economist and Professor at Columbia University declared when he delivered a compelling virtual address to Afreximbank’s 32nd Annual Meetings (AAM2025) in Abuja, Nigeria. The unexpected proposal that turned the conversation on its head.

It was a startling claim in a continent long haunted by debt crises conversations and the way forward thereto.

Financial paradigm

Yet, Sachs was not advocating for recklessness. He envisioned a radically restructured financial paradigm—one where debt becomes catalytic, not crippling. He argued that the continent cannot grow without large-scale investment in infrastructure, education, and industrial capacity and that more resources still need to be channelled to these sectors. Sachs proposed a new economic blueprint: infrastructure investment equivalent to 40 percent of GDP, universal secondary education, and an aggressive “Made in Africa 2035” strategy to drive industrialisation.

His vision is anchored on Africa’s unique demographic advantage—home to one of the world’s fastest-growing and youngest populations, which he asserted must be explored for industrial growth.“There are three places with 1.5 billion people—China, India, and Africa,” Sachs said.

“Africa’s turn starts today,’’ he proclaimed even as public coffers are groaning under the weight of interest payments alone—$20 billion in external debt whose servicing is due this year.

For a continent brimming with potential, these figures are more than just economic metrics—they are symptoms of a deeper structural strain which if not checked will affect the continent’s 2063 economic agenda.

But amid the gloom of mounting liabilities, Sachs’ radical shift in narrative is emerging—one that challenges conventional thinking and dares to recast debt not as a burden, but as a tool for transformation. In Kenya, National Treasury and Economic Planning Cabinet Secretary John Mbadi has disclosed that the country’s public debt hit about Sh11 trillion by January 2025.

This is roughly divided equally between domestic Sh5.9 trillion and external Sh5.1 trillion debt—with debt-to-GDP peaking at around 65.7 per cent but declining from about 72 per cent.

However, most of the resources are going towards debt instead of going towards criticial areas like infrastructure development and enhancing industry.

The goal is to reach the legal ceiling of 55 per cent by 2028/29 with Mbadi revealing that Kenya wont default on its debts. He notes that though debt is sustainable, the challenge lies in liquidity due to debt maturities clustering between now and 2032.

He is on record defending the plan to continue borrowing—domestically and externally—to refinance maturing debt and fund operations, including tapping a recent $1.5 billion UAE bond and a $1.5 billion 10-year Eurobond.

What is more telling about African countries sovereign debts, however, is the shifting landscape of creditors: private bondholders now own 54 per cent of Africa’s external debt, up from just 18.8 per cent in 2008, a sign of growing reliance on volatile capital markets, according to Sachs.

“This dependency comes at a cost. Credit ratings remain unfavourable, borrowing costs remain high, and nations often find themselves trapped in cycles of refinancing rather than growth,’’ Sachs claimed. Alongside Sachs’ statement, a former Singaporean diplomat and economic development strategist Dr Kishore Mahbubani offered hard-won lessons from Asia’s rise.

“Development is extremely difficult,” he warned, invoking Vietnam’s missteps and Singapore’s calculated wins. But with focus, discipline, and an ecosystem that rewards ambition, he believes Africa can follow suit—if it learns the right lessons. For all its demographic and resource strength, Africa remains a financial underdog. “The world saves $30 trillion a year,” Sachs said. “Africa gets a trickle. Sometimes, net flows are negative. This ought to change.”

Much of this imbalance is embedded in a global financial architecture designed without Africa in mind. Sachs lambasted credit rating agencies for applying cookie-cutter metrics that ignore nuance and penalize risk unfairly.

He challenged the so-called “sovereign ceiling” doctrine that limits African corporations from being rated higher than their governments—an outdated model that stifles private investment and growth. Now Africans have decided to develop their own credit rating agency, which is coming soon, according to Dr Meshack Mituse from the African Unions-APRM, a body charged with universal policy reviews.

“We are developing our own rating and reporting debt standards,’’ he disclosed, saying some of the latest ratings on countries like Kenya and Afreximbank have been biased. Instead of fighting for space within a rigged system, Sachs urged Africa to seek alternative capital sources: China’s Belt and Road, Gulf sovereign wealth funds, and India.

But beyond capital, he called for a reimagined relationship with finance—one rooted in long-term partnerships, not short-term returns.

Mahbubani echoed that sentiment, pointing to inefficiencies within Africa’s fragmented markets.

Infrastructural integration

“Africa’s 55 economies must function as one,” he said. Only through fiscal and infrastructural integration can the continent harness its true potential.

At the centre of this transformative agenda stands Afreximbank, helmed by Prof Benedict Oramah, whose tenure has been nothing short of revolutionary.

From $5 billion in assets a decade ago, the bank now commands over $37 billion, having mobilised $250 billion in trade and development financing across Africa. Nowhere is this impact more visible than in Nigeria.  Under President Bola Tinubu, the country has become a laboratory for bold economic reform—removing fuel subsidies, unifying the naira, and investing in critical infrastructure.

With over $52 billion in financing from Afreximbank, Nigeria has seen transformative projects take root: from the Dangote Refinery to the African Medical Centre of Excellence and the Pan-African Payment and Settlement System (PAPSS)—a platform Tinubu described as a “shield” against financial volatility.