African countries spend about $90 billion every year servicing debt and pay another $75 billion in additional interest because of the high risk premium attached to borrowing, Kenya’s Principal Secretary for Foreign Affairs, Korir Sing’oei, has said.
Mr Sing’oei stated that the cost was forcing African governments to make difficult choices between servicing debt and spending on health, education and climate resilience, even as the continent requires about $1.3 trillion annually to achieve the Sustainable Development Goals.
He spoke on Friday in Nairobi, Kenya, at the closing ceremony of the sixth African Conference on Debt and Development (AfCoDD VI), organised by the African Forum and Network on Debt and Development (AFRODAD).
“Africa pays $90 billion a year in debt service. That is more than aid and climate finance combined,” Mr Sing’oei said.
He noted that the continent’s debt burden was not simply the result of frequent defaults, arguing that African countries generally default less than is often assumed. Rather, he said, they pay more because of the risk premium attached to African borrowing.
He described the additional $75 billion paid in interest as a “trust tax”.
“This Africa risk premium forces an unpleasant choice between servicing expensive debt and investing in the health, education and climate resilience of our people,” he said.
The pressure is also visible in Nigeria, where the government says it incurred N10.61 trillion in additional debt-service costs between June 2023 and December 2025.
The amount was N4.14 trillion more than the N6.47 trillion spent on strategic infrastructure during the same period, according to a scorecard released by the Ministry of Finance.
The bulk of the additional cost — N9.37 trillion — was linked to the depreciation of the naira and its effect on external debt servicing, while higher interest rates added another N1.24 trillion to domestic debt-service costs.
Together, the additional debt-service costs represented about 34.6 per cent of the government’s N30.64 trillion incremental expenditure during the period, compared with 21.1 per cent for strategic infrastructure.
The Nigerian figures offer a local illustration of the broader problem Mr Sing’oei was spotlighting: governments can secure financing, but changes in exchange rates and interest rates can substantially increase what they ultimately pay.
Nigeria’s Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, has acknowledged that the economic reforms that contributed to those costs have imposed a significant burden.
The Nigerian government attributed the increase in external debt-service costs largely to the depreciation of the naira following foreign exchange reforms, while higher monetary policy rates increased the cost of domestic borrowing.
Mr Sing’oei said the cost of capital had become a major foreign policy issue for Africa and should no longer be left mainly to finance ministries and national treasuries.
“In the 1960s, foreign policy on the continent was about political independence and political sovereignty,” he stated.
“In the 1990s, when state capacity was hollowed out through structural adjustment programmes, it shifted to aid, when Africa was knocking on doors for more aid.
“Today, I submit, the central theme of foreign policy for Africa is the cost of capital.”
He explained that Africa’s financing needs were too large for foreign policy institutions to remain on the sidelines of discussions about debt, bonds, equities, securities and other financial instruments.
According to him, many foreign policy officials do not have enough expertise in complex financial matters, while officials in finance ministries may not always have a sufficient understanding of the geopolitics and history behind international lending.
He said the gap sometimes leaves African countries negotiating financing arrangements on terms that are less favourable to them.
The nature of Africa’s creditors has also changed considerably, making debt negotiations more complicated.
Mr Sing’oei stated that about 70 per cent of Africa’s debt was owed to Paris Club creditors in the 1990s.
Today, he said, about 40 per cent is held by private bondholders in financial centres including London, Hong Kong and the Gulf states.
He noted that the change has made debt restructuring more difficult.
He cited Zambia, where the restructuring of the country’s debt took four years amid disagreements between China and the Paris Club.
Kenya’s own Eurobond negotiations, he said, involved traders in Paris, London, New York and elsewhere.
“This is not just a loss of finance; it is also a loss of sovereignty,” Mr Sing’oei stated.
He noted that some loans came with explicit conditions, including collateral and mineral offtake arrangements, while other forms of leverage were less direct.
A country that defaults, he said, can face a downgrade in its credit rating, reduced access to capital and increased pressure on its government.
The high cost of borrowing is also complicating Africa’s response to climate change.
Mr Sing’oei said about 60 per cent of the world’s best solar resources are in Africa, yet the continent receives only about one per cent of green finance.
“We cannot build green industrialisation when we are borrowing at 12 per cent in dollars,” he explained.
“We are borrowing expensive money to solve a climate crisis we did not cause.”
He said debt should therefore become part of Africa’s climate and foreign policy discussions at the African Union, the European Union, the G20, the climate negotiations and other international forums.
Mr Sing’oei stated that African governments were already pursuing measures to reduce the continent’s exposure to expensive borrowing.
One of them is a collective approach to debt negotiations.
He said the African Common Position on Debt, adopted earlier this year in Lomé, Togo, should allow African countries to negotiate collectively rather than approaching creditors separately.
“It means not 54 solo negotiators on the part of each African country, but a collectivised negotiation,” he noted.
He also backed the proposed Debtors Club, a coalition of debtor nations intended to strengthen developing countries’ position in negotiations over the global financial system.
But he explained that governments would need to work closely with civil society organisations, which could provide research, data and negotiating strategies.
Another measure is the planned African Credit Rating Agency, which Mr Sing’oei said would be launched in Mauritius in October.
He said the agency would give African countries greater capacity to assess their own risk and challenge the high premiums attached to their borrowing.
“African leaders have been establishing the African Credit Rating Agency, which we launch in Mauritius in October,” he stated.
He stressed that the objective was not to stop African countries from borrowing.
Africa needs both debt and equity to finance development, he said, but loans should be secured on reasonable terms and, where possible, through concessional financing.
Mr Sing’oei also called for stronger cooperation among African multilateral financial institutions.
He cited the African Development Bank, Afreximbank and the Trade and Development Bank, which he said had traditionally operated largely in silos but were now being brought together under the Alliance of African Multilateral Financial Institutions.
He called for greater use of instruments such as debt-for-food and debt-for-climate swaps, while cautioning that climate financing should not become another means of undermining African countries’ sovereignty.
His fourth proposal was reform of the G20 Common Framework for debt treatment.
ALSO READ: 32 African countries now spend more on debt servicing than healthcare – Experts
Mr Sing’oei said the framework should respond more quickly when countries begin approaching debt distress instead of waiting until their financial situations become critical.
He welcomed the African Union’s planned participation at the G20, saying this would strengthen Africa’s voice in discussions on the global financial system.
Mr Sing’oei said Africa was seeking to cut its borrowing premium by about 200 basis points over the next three to four years.
He estimated that such a reduction could save African countries about $20 billion every year.
“That $20 billion is enough to fund the African Union’s Agenda 2063 infrastructure agenda,” he stressed.
Civil society wants debt promises to go beyond conferences
The push for a stronger African response was also taken up by civil society leaders at the conference, who said debt reform would mean little if commitments made by governments were not followed by sustained action at home.
Diana Gichengo, Executive Director of the Institute for Social Accountability; Leo Atakpu, Deputy Executive Director of the Africa Network for Environment and Economic Justice; Bertha Phiri, Executive Director of the Malawi Economic Justice Network; Isaac Mwaipopo, Executive Director of the Centre for Trade Policy and Development; Janet Zhou, Executive Director of AFRODAD; and Dr Marième Gnagna Thiam, Senior Programme Coordinator, Tax Equity, International Budget Partnership, made the call during a panel on building a Pan-African civil society movement to sustain the Common African Position on Debt.
They stated that civil society groups also needed to work more closely with one another, rather than pursuing separate campaigns on issues that often overlap.
They proposed a flexible platform that would allow organisations to keep their independence while agreeing on common priorities, sharing research and coordinating advocacy across countries and international forums.
They also said ordinary citizens should have a greater say in how public debt is contracted and spent.
Citizens, they noted, should be able to find out who borrowed the money, what it was borrowed for, how much it cost, whether public assets were used as collateral and what the borrowing achieved.
They called for easier access to debt information and stronger scrutiny by parliaments, auditors, researchers and the media.
Discover more from Premium Times Nigeria
Subscribe to get the latest posts sent to your email.
