African debt stabilizes amid high borrowing costs and currency pressure

African public finances are showing signs of recovery as government debt stabilizes and budget deficits narrow. In Sub-Saharan Africa, the typical government debt-to-GDP ratio stood at approximately 57% in 2025, with primary fiscal deficits falling from 3.1% of GDP in 2020 to roughly 0.5% in 2025. Countries such as Ghana and Zambia have also made progress in exiting debt distress.

Despite these improvements, high borrowing costs and rising debt-service obligations continue to strain national budgets, limiting spending on healthcare, education, and infrastructure. The World Bank notes that domestic debt has become the primary source of government financing since 2021, leading to increased exposure to higher interest rates and shorter repayment periods.

Additionally, the Dangote Group’s H1 2026 Economic Report highlights that a strong US dollar and elevated global interest rates are putting significant pressure on African currencies. This environment creates a difficult financing landscape, particularly for nations with heavy external debt and high energy import bills, which can crowd out essential development spending.