Top 5 African countries with worst debt crisis in 2023, Nigeria missing

Developing countries in Africa are battling a severe debt crisis as they continue to face macroeconomic challenges that pose a drawback to debt servicing and economic growth.

These countries face reduced economic growth and are forced to explore debt restructuring options or face financial instability and complete economic catastrophe.

African countries bowed by the debt crisis

Heads of central banks and finance ministers are billed to meet at the World Bank Group and International Monetary Fund (IMF) soon to discuss the danger of a debt crisis on the continent.

Rising inflation, borrowing costs, and a strong dollar exacerbated many African countries' loan repayment woes, forcing them into default in 2021.

Below is the list of African countries facing a debt crisis

Ghana:

The West African country has been hit with the worst economic crisis in a generation, according to BusinessInsider.

Debt repayments account for Ghana's 40% of government income in 2022, becoming the fourth country to seek debt restructuring in January under G20 Common Framework.

In December 2022, Ghana obtained a $3 billion agreement with IMF. Ghana is also faced with the worst inflation in history at 52. 8%, a Reuters report said.

The country's consumer inflation slowed to 52.8% year on year in February from 53.6% in January.

Malawi:

The country is dealing with a currency crisis, including a debilitating budget deficit of 1.32 trillion kwachas, about $1.30 billion or 8.7% of its GDP.

The country is trying to restructure its debt to obtain an IMF bailout approved in November 2022.

Zambia: The landlocked African country is expected to be the first to default on its debts.

Negotiations with creditor countries have been delayed, and external debt increased to $18.6 billion.

The country's currency, the kwacha, had fallen more than 10% against the US dollar since 2023, contributing to high inflation, the country's central bank said. It also blamed the currency's decline on delays in debt restructuring.

Tunisia:

Tunisia is a tourism-dependent economy and suffers from a debt crisis that resulted in a shortage of essential goods.

The country has witnessed a $1.9 billion IMF loan blockage due to the president's need for more progress in implementing critical reforms.

Most of Tunisia's debts are local, despite repayments on international loans due later this year. International rating agencies predict a default by the country.

Egypt:

Last December, Egypt received a new $3 billion IMF loan by agreement for a flexible currency, a more prominent private sector role, and many other monetary and fiscal reforms.

Import currency regulations restricted economic activities, and a forex shortage persisted despite three significant devaluations that have reduced the Egyptian pound since March last year.

The country is battling the worst inflation in five years at more than 30%.