Africa’s Debt Burden Undermines Sustainable Development, UN Experts Warn

Africa’s mounting debt is significantly reducing funding for sustainable development in Least Developed Countries (LDCs), particularly affecting critical sectors like health and education, according to Ms. Oyebanke Abejirin, Economic Affairs Officer at the UN Economic Commission for Africa (UN ECA). Speaking at the Second Session of the Committee on Economic Governance in Addis Ababa, Ethiopia, Ms. Abejirin highlighted the severe financial pressures debt servicing places on African LDCs, eroding their capacity to invest in the Sustainable Development Goals (SDGs).

Key Challenges Highlighted

Ms. Abejirin explained that the high costs associated with servicing debt have caused a tangible decline in funding for essential services. In 2021, African governments spent 4.8% of their GDP on debt servicing, compared to just 2.6% on health and an equal 4.8% on education. By 2022, debt servicing costs reached 11.6% of exports, further exacerbating fiscal constraints.

She pointed out that social protection systems in African LDCs are inadequate, with coverage extending to only 12-13% of the population. Ms. Abejirin emphasized that robust and inclusive social safety nets are vital to shield LDCs from global shocks, such as the COVID-19 pandemic and climate-related disasters.

Opportunities for Improvement

Ms. Abejirin called for enhanced domestic revenue generation to bridge the gap in financing SDGs. Despite constituting 10% of the global population, African LDCs contribute less than 1% of the global GDP, highlighting the need for more sustainable fiscal frameworks. She advocated for a public debt sustainability strategy that links debt obligations to productive investments, enhances fiscal and debt transparency, and promotes responsible borrowing practices.

Insights from Mozambique

Ms. Pamela Mabanda from Mozambique’s Ministry of Finance shared her country’s struggles with a trade balance deficit, where imports outweigh exports, mainly due to intermediate and capital goods. She noted that approximately 70% of Mozambique’s expenditure is allocated to debt repayment, leaving limited resources for investments and support.

To address these challenges, Mozambique is formulating strategies to expand its fiscal space. Ms. Mabanda stressed the importance of reducing tax evasion, especially on key imports, and increasing revenue through fiscal consolidation, diversification of financial resources, and proactive risk management.

Broader Regional Context

Mr. Allan Mukungu, Economic Affairs Officer at the UN ECA, discussed the broader issue of fiscal deficits across African countries, noting that average public debt levels are projected to reach 67% in 2024. He reported that nine African nations are currently in debt distress, while 11 others face high risks, undermining their ability to finance development initiatives.

Mr. Mukungu emphasized the importance of Integrated National Financing Frameworks (INFFs) to align available funding with national development plans and unlock resources for SDG priorities. He urged a focus on creating fiscal space to support sustainable development and achieve the aspirations outlined in the African Union’s Agenda 2063.

Economic Governance Committee Insights

The Second Economic Governance Committee session, held in Addis Ababa in mid-November, brought together representatives from 31 countries to examine the challenges of financing sustainable development in Africa. The discussions also laid the groundwork for the 4th International Conference on Financing for Development, scheduled for 2025.

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