By Christian Kazumba, expert in sub-Saharan private sector development.
On average, public debt in Africa represents between 60 and 65% of GDP. While this percentage has doubled over the past fifteen years, it is significantly lower than the European Union average, as well as what is observed in France, Italy, Spain, Japan, or the United States. Furthermore, this ratio remains lower than the 70% limit imposed by the West African Economic and Monetary Union (UEMOA) on all its member countries.
A quick and certainly too hasty analysis of these few figures could lead us to conclude that the continent’s debt is under control. Unfortunately, this is far from the case!
Indeed, the cost of African debt has tripled since the 2007-2008 period. As a result, debt interests represent, in a large number of sub-Saharan countries, more than 25% of their public revenues.
This growing financial burden currently constitutes the first item of expenditure for the state in some countries, surpassing sovereign functions such as health, education, justice, national defense, and investment in infrastructure. It therefore significantly limits the budgetary leeway of the countries concerned.
More than our level of indebtedness, it is indeed the interest burden that is likely to weigh heavily and call into question the sustainability of our debt.
Can we highlight the link between credit rating agencies and the cost of African debt?
Many passionate and fascinating debates point the finger at American credit rating agencies, which control more than 90% of the global sovereign rating market (Standards & Poor’s, Moody’s, and Fitch). Therefore, many specialists emphasize the importance and urgency of rating African countries in local currency rather than in dollars, euros, or yen.
It is certain that foreign currency rating artificially accentuates the perceived risk and consequently increases the cost of borrowing, taking into account possible currency fluctuations and a potential weakening of foreign exchange reserves due to uncontrollable exogenous shocks.
A still too weak fiscal mobilization
Beyond external criticisms, however justified they may be, African countries must also focus on internal avenues for progress. It should be noted that with an average of 15%, the tax revenue mobilization rate in Africa is the lowest on the planet. It remains far from the performances recorded within the OECD (over 30%) and the European Union (over 40%).
It is undeniable, in my opinion, that this immense structural weakness forces African states to borrow from abroad to finance their public policies, under very unfavorable conditions (high interest rates and short maturities).
The French case: an example of fiscal mobilization
Despite a constantly increasing budget deficit in recent years (5.8% in 2024), a public debt stock now exceeding 3,400 billion euros, and a political landscape marked by uncertainty and instability, French interest rates have not skyrocketed for the moment. While several reasons can explain this relative calm, international markets regularly applaud France’s ability to collect taxes in all circumstances, thanks in particular to a tax administration with an excellent reputation in terms of structuring, digitalization, and efficiency.
Informal savings, still untapped potential
In Côte d’Ivoire, 80% of savings are informal. If our African countries were able to better channel this informal savings towards financing projects of collective interest (such as the construction and management of social housing), their level of indebtedness would likely be impacted downwards, generating renewed confidence from domestic and international markets. All of this could contribute to a relaxation of their interest rates and an improvement in their sovereign rating.
In this regard, recent initiatives to establish and develop deposit and consignment funds, particularly in Senegal, Côte d’Ivoire, and Benin, should be encouraged and praised. Their roles in structuring national savings and financing the real economy could provide a viable solution and contribute to the sustainability of African debt.
Conclusion: Developing Financial Sovereignty
In my opinion, increased mobilization of internal resources is a “sine qua non” condition for the appreciation of the sovereign rating of sub-Saharan countries. Some criticisms of American credit rating agencies seem perfectly justified to me. Nevertheless, they should not divert African states from certain “prerequisites” for development: strengthening the structuring of local tax administrations, formalizing an informal sector that remains predominant, and mobilizing and directing popular savings towards financing projects of common interest.
By building lasting trust between citizens, institutions, and markets, Africa can improve its rating, reduce the cost of its debt, and affirm its economic sovereignty.
Christian Kazumba
Working for sixteen years on the African continent, Christian Kazumba has successively worked in Morocco, Mali, Burkina Faso, Togo, DR Congo, and Gabon in operational or general management positions in service sector companies.
He notably led, on behalf of a “Big Four” in the DRC, a World Bank project to set up SME centers in Kinshasa, Lubumbashi, Goma, and Matadi.
After directing the Gabonese subsidiary of Entrepreneurial Solutions Partners, a consulting and investment firm focusing on the development of the sub-Saharan private sector, he is now based in Abidjan where he serves as Chief of Staff for the same firm.
