7 Sub-Saharan African Countries With The Highest Foreign Debt
Last week, when the former United States Foreign Secretary, Rex Tillerson visited Africa, his first message was a warning for African countries to stay away from Chinese loans.
According to Tillerson, the West is worried that Africa is borrowing too much from overseas, especially from China, in an unsustainable manner.
In Nigeria, public debt stands at 21.7 trillion naira as at the end of 2017, about 15.3% of Gross Domestic Product, GDP.
But how neck-deep are African countries in debt?
This list examines 7 countries in Sub-Saharan Africa and their status of debts owed foreign creditors such as IMF and countries like China.
1. South Africa - $143 Billion
*South Africa's City of Johanesbourg
South Africa is Africa’s second largest economy. But its foreign debt is not only the largest in Sub-Saharan Africa but also on the entire continent, according to World Factbook.
Answersafrica said South Africa’s debt is compounded by its credit culture.
You see, South Africa runs its economy almost entirely on credit. You can call it ‘Pay Later’ economy. So, from the regular consumer on the street to the government, everyone is accumulating debt.
According to the report, South Africa’s external debt averaged $856 million from 2002 until 2015, reaching all -time high of $145 million in the fourth quarter of 2014.
As at December 2016, its external debt was estimated at $142,833,000,000.
2. Angola - $37.7 Billion
*Angola's capital city, Luanda
Angola is an oil rich former Portuguese colony in Southern Africa.
Angola is also rich in other mineral resources such as diamonds, gold, copper as well as wildlife.
The country is Africa’s fastest-growing economy and one of the fastest-growing in the world, with an average GDP growth of 20% between 2005 and 2007.
In the period 2001–10, Angola had the world's highest annual average GDP growth, at 11.1%.
Angola is now the third largest financial market in sub-Saharan Africa, surpassed only by Nigeria and South Africa.
But it also has the second highest external debt in Sub-Saharan Africa estimated at $37,700,000,000 by the end of December 2016.
3. Ethiopia - $22.5 Billion
*Ethiopia's Capity City, Addis Ababa
When you hear of Ethiopia, perhaps what comes to mind is the political crisis rocking the country that has forced Prime Minister Hailemariam Desalegn to resign.
But it is indeed one of Africa’s most promising economies.
Over the past decade, Ethiopia had embarked on ambitious economic reforms and infrastructural investment with real domestic product (GDP) growth averaging 10.9% between 2004 and 2014, according to World Bank.
But that rapid economic growth has also seen it accumulate foreign debt to the tune of $22,490,000,000, the third highest in Sub-Saharan Africa.
4. Kenya - $22.2 Billion
*Kenya's Capital, Nairobi
Kenya is East and Central Africa’s strongest and largest economy.
Despite widespread poverty and inequality, it remains one of the choice investment destinations in Sub-Saharan Africa.
The Kenyan economy has seen much expansion, seen by strong performance in tourism, higher education and telecommunications over the past decade.
In 2007, Kenya's economy grew by more than 7%, and its foreign debt was greatly reduced.
But this changed immediately after the disputed presidential election of December 2007, following the chaos which engulfed the country.
Between then and June 2017, its external debt had risen to $22,171,900,000, the fourth highest in Sub-Saharan Africa.
5. Ghana – $21.2 Billion
*Ghana's Capital, Accra
For many Nigerians, Ghana is merely a small neighbour competing with them at everything; from music to movies to jollof rice.
But Ghana is indeed one of West Africa’s strongest regional economic hubs. Ghana is endowed with mineral resources such as gold and other precious metals. It also has cocoa in abundance.
The west African nation is classified as a middle-income country. Services account for 50% of GDP, followed by manufacturing, 24.1%, extractive industries, 5%, and taxes, 20.9%.
But its public debt continues to climb with external debt rising to $21,170,000,000 as at December 2016.
This prompted the IMF to issue a warning in its Article IV report on Ghana last year that the country, “continues to face high risk of external debt distress”.
Ghana’s external debt is the fifth highest in Sub-Saharan Africa.
6. Nigeria - $18.91 billion
For the first time, Africa’s largest economy is not taking the lead in negative indices, but its rising external debt profile is no less worrisome.
Nigeria’s external debt rose to $18.91 billion, about 5.787 trillion naira as at the end of December 2017.
This is the sixth highest in Sub-Saharan Africa.
According to data released on Wednesday by the Debt Management Office, Nigeria’s domestic debt also rose to 15.937 trillion naira, bringing the total debt stock of the country to 21.725 trillion naira.
It was 17.36 trillion naira at the end of 2016.
In October last year, the IMF warned Nigeria, along with other oil exporting countries to soft-pedal on foreign debt, saying there is a need to make it sustainable.
7. Tanzania – $15.9 Billion
*Dares Salaam, Tanzania
Perhaps, you never knew that this Kenyan neighbour is officially called United Republic of Tanzania.
As of 2014, Tanzania's gross domestic product, GDP was an estimated $43.8 billion.
From 2009 through 2013, Tanzania's per capita GDP grew an average of 3.5% per year, higher than any other member of the East African Community and exceeded by only nine countries in Sub-Saharan Africa.
At $15,890,000,000, Tanzania has the sixth highest external debt in Sub-Saharan.
Fortunately, the IMF believes the country will do just fine with that level of foreign debt. In 2016, the Fund said its “Debt Sustainability Analysis on Tanzania indicates that Tanzania’s risk of debt distress is low”.
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