In the wake of multiple shocks, growing global macroeconomic uncertainty, and a slowing global economy, many African countries are facing debt distress in 2025. African external debt is more than US$1 trillion in 2024 compared to more than $500 billion in 2020. Most Sub-Saharan African countries are facing an increase in debt vulnerabilities. According to the UN, globally, over two thirds of low-income countries (many of which are in Africa) are either in debt distress or at a high risk of it. This includes at least 22 African countries. According to IMF, the average total public debt ratio in sub-Saharan Africa has almost doubled in just a decade—from 30 percent of GDP at the end of 2013 to close to 60 percent of GDP by end-2024, and the ratio of interest payments to revenue has more than doubled since 2010.

The trends are not positive. More money is going into debt servicing than priority expenditures for many countries. About 3.4 billion people globally are living in countries that spend more on interest payments than on either education or health. Higher borrowing costs, declining ODA, climate shocks, and commodity price volatility risk making the next ten years a lost decade for African development.

On top of this, there are growing concerns multilateral money is being used to pay private creditors in several African countries. All these trends threaten a lost decade of development progress for many of the world’s poorest nations.

The G-20 Common Framework (CF), which was envisaged to steer the process, has been slow in providing relief, and there is not a clear roadmap for countries. The journey for Ghana, Zambia, Ethiopia, and Chad has been complex and uncertain. The heterogeneous creditor landscape has led to the lack of a proper framework to assess comparability of treatment between creditors. Official creditors have favored maturity extensions with no principal reduction, while private creditors have tended to prefer upfront cash. There is insufficient consideration for debt relief via principal reductions.

A lack of consensus between official and private creditors, as witnessed in the cases of Zambia and Ethiopia, have slowed the implementation of the CF. This paper finds that the existing debt architecture under the CF should be more meaningfully reformed. Drawing on from in-country experience and UNDP’s analytical and advisory work in Ethiopia on macro policy and debt management, the paper proposes several practical reform areas. Seven stand out: improve the analytics regarding solvency in light of protracted liquidity challenges; improve the realism of debt sustainability analysis (DSA) projections; ensure strong participation of China and more uniform treatment of Chinese loans; find a simpler formula for comparability of treatment; cap a country debt service by ringfencing social and pro-poor expenditures and propose a more gradual
fiscal adjustment path for countries in IMF programs; bring in private creditors fully and early on in the restructuring process; and have stronger UN involvement during the process to help guide borrowers and mediate between debtors and creditors. With these reforms, African countries will be able to have deeper solutions to debt distress with the support of the international community.