4 World Economic Forum January 2023
STATS
Debt and debt sustainability Debt has come under the spotlight in the past 18 months. There is talk of debt distress and the recent default in Ghana has rattled markets. Debt to GDP is manageable by global metrics. However, debt servicing is a big issue not least because tax collection is so low. As a result debt servicing is taking up much of government spending, in some cases more than is being spent on education or health and eating into what the government can spend on capital investments.
Nigeria is an interesting test case. Its fiscal burden of total interest payments, domestic and external combined, is by far the highest of the 10 African countries surveyed. At the same time, it had the third highest capital expenditure as a proportion of total revenue and grants in 2020. This unusual combination might suggest that Nigeria has unsustainable debt metrics. All 10 countries under our coverage posted budget deficits in 2020 although this was the year when the Covid-19 pandemic struck: revenue naturally slumped and governments around the world were under pressure to mitigate its impact.
The Nigerian government spent a total (current and capital spending, and interest payments) more than three times its revenue inflows in 2020, which shows that it favours an expansionist fiscal stance (and that its revenue collection is pitiful). It can borrow domestically at manageable interest rates because it can tap demand from a large domestic institutional investor base, led by pension funds and mutuals. This is an advantage shared in varying degrees by South Africa, Côte d’Ivoire, Egypt and Kenya. Last year as much as 90% of South African public debt was domestic.
South Africa
$268.8bn
Total public debt for selected countries, 2021
35%
30%
25%
29%29% 29%29%
20%
15%
10%
28%28%
Total external debt service/total exports, 2020 (%)
26%26%
21%21%
20%20%
13%13% 13%13%
12%12%
5%
0%
200%
4%4%
Egypt
South Africa Kenya Ethiopia
Côte d'Ivoire Tunisia Morocco Nigeria Ghana
Botswana
Fiscal strains 2020 (% total revenue and grants)
180% 160% 140% 120%
100% 80% 60% 40% 20%
Current spending n Interest payments n Capital spending n
↑ more than two times ↑ more than two times
0%
Nigeria Ghana Egypt Kenya
South Africa
Côte d'Ivoire Tunisia Morocco Ethiopia Botswana
External debt in 2022 (% of GDP)
$316.1bn Egypt
$95.8bn Nigeria
$58.8bn Ghana
$3.3bn Botswana
$72.6bn Kenya
$73.3bn Tunisia
Domestic debt $611.85bn
$457.55bn
External debt
29%29%
50
f GDP)
o
(%
2022
l Debt in
Externa
40
30
20
10
$59.1bn Ethiopia
$82.8bn Morocco
Cote d'Ivoire
$38.8bn
0
NigeriaEgypt
South AfricaAlgeriaMoroccoAngolaKenyaGhanaSenegal
