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African Governments are Living Beyond their Means

Central bankers in Africa are joining a chorus of voices, which includes the International Monetary Fund (IMF), who are worried about surging public debt levels on the continent. Nigerian central bank governor Godwin Emefiele warned in January that rapidly rising debt and a lack of fiscal buffers could threaten economic growth. That same week Kenyan central bank governor Patrick Njoroge said in an interview that his country was running out of room to increase its credit load. To pay for infrastructure and public servants’ wages, African governments have tapped debt markets like never before to take advantage of investors’ appetite for high-yielding paper. Public debt as a percentage of GDP in Sub-Saharan Africa has doubled to more than 50% since 2008, IMF data show. While that’s below the average for emerging markets, the continent’s debt ratio rose faster than that of any other country grouping over the period.