How to get Africa out of debt

This policy brief examines the fiscal impact of COVID-19 on African nations, focusing on the limitations of the G20/Paris Debt Service Suspension Initiative (DSSI). It argues that while the DSSI provides temporary liquidity relief, it fails to address long-term solvency crises due to the non-participation of private creditors and multilateral development banks (MDBs), and the discouraging influence of credit rating agencies.

• The COVID-19 pandemic exacerbated existing debt distress in Africa, increasing average debt-to-GDP ratios from approximately 60% to 70%. The African Development Bank (AfDB) predicts that these ratios could rise by up to 10 percentage points across 2020 and 2021.
• The G20/Paris Debt Service Suspension Initiative (DSSI) has seen a disappointing response from both debtor and creditor sides. While 38 African countries are eligible, some—including Nigeria, Kenya, Ghana, and Rwanda—opted out to avoid credit rating downgrades or to maintain access to private capital markets. On the creditor side, private creditors and MDBs have not joined the initiative.
• Private creditors hold the largest share of debt service obligations for African DSSI countries at $13 billion, followed by official creditors at $11 billion and MDBs at $7 billion. The refusal of the private sector to participate creates an uneven burden on official creditors.
• Major credit rating agencies (S&P Global, Moody's, and Fitch Ratings) have effectively discouraged participation in the DSSI by suggesting that suspending debt payments could be viewed as a credit negative or a sovereign default. This has led to downgrades or threats of downgrades for countries such as Ethiopia, Cameroon, Senegal, and Côte d’Ivoire.
• China's role in the DSSI is characterized by a distinction between its public banks and the China Development Bank (CDB). While Beijing stated public banks would participate, it classified the CDB as a 'private bank' to exempt it, a move criticized by the G7 and the World Bank.
• The document proposes several measures to resolve the debt crisis: extending the DSSI to four years, persuading private creditors to join, reallocating IMF Special Drawing Rights to low- and middle-income countries, and establishing a permanent UN-led forum for monitoring and cancelling unsustainable debt with binding rules for responsible lending and borrowing.

APA

South African Institute of International Affairs (2020). How to get Africa out of debt. https://saiia.org.za/research/how-to-get-africa-out-of-debt/

Chicago

South African Institute of International Affairs. How to get Africa out of debt. 2020. https://saiia.org.za/research/how-to-get-africa-out-of-debt/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=How to get Africa out of debt |date=25 November 2020 |url=https://saiia.org.za/research/how-to-get-africa-out-of-debt/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2020how, author = {{South African Institute of International Affairs}}, title = {{How to get Africa out of debt}}, institution = {South African Institute of International Affairs}, year = {2020}, month = nov, url = {https://saiia.org.za/research/how-to-get-africa-out-of-debt/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }