The African Development Bank (AfDB) has cautioned that Nigeria and several other major African economies are facing mounting debt pressures as higher borrowing costs and weakening fiscal buffers strain public finances.
In its latest report, Africa’s Macroeconomic Performance and Outlook, AfDB warned that while some countries have made modest progress in fiscal consolidation, overall debt levels across the continent remain elevated, posing risks to economic stability and long-term development.
The report highlights persistent debt distress and limited fiscal space as key challenges clouding Africa’s economic outlook. As of September 2025, seven African countries were already in debt distress, with 13 more, including large economies such as Nigeria, Ghana, and South Africa, classified as being at high risk.
According to the AfDB, rising debt-service obligations are significantly constraining government spending capacity, particularly in critical sectors needed to drive growth and build economic resilience. The bank warned that the combination of heavy debt burdens and shrinking fiscal space could stall Africa’s growth momentum and slow structural transformation efforts.
It further noted that increasing refinancing pressures may compel governments to adopt procyclical fiscal tightening or turn to more expensive short-term borrowing, both of which could undermine fragile economic recoveries.
Despite a slight easing in global financial conditions, several African countries re-entered the Eurobond market in 2025. Kenya raised $1.5 billion in October, followed by Angola with $1.75 billion, while Nigeria secured $2.35 billion.
However, the AfDB stressed that borrowing costs remain significantly above pre-pandemic levels. Kenya’s issuance, for instance, carried interest rates of 7.875 percent for a seven-year tenor and 8.8 percent for 12 years.
Angola’s bonds were priced at 9.25 percent for five years and 9.78 percent for ten years.
The bank warned that such elevated financing costs, coupled with currency risks, could threaten debt sustainability and limit governments’ ability to fund essential social programmes. Over time, this could weaken long-term development prospects and heighten the risk of social and political instability across the continent.
