Europe Must Help Africa Break the Cycle of Debt
On November 24 and 25, African and European leaders will gather in Luanda, Angola, to participate in the EU-Africa Union summit. Marking 25 years of partnership between the EU and the African Union, this meeting is not merely a celebration but a moment to redefine what the next quarter-century will mean for relations between the two continents.
In Africa, the risks have reached a peak. Many African countries are burdened with unsustainable levels of sovereign debt that hinder their ability to invest in resilient infrastructure and sustainable development. Since 2008, their external public debt has more than tripled, with a sharp rise in commitments to private bondholders.
These debt burdens have been exacerbated by soaring borrowing costs and the depreciation of African currencies against the US dollar. Now, African borrowers face interest rates that are two to three times higher than those paid by wealthier countries, turning loans from a lifeline into shackles.
This is not a sound economy; it is structural injustice. In 2024 alone, African countries paid $163 billion to service existing debt. These overwhelming payments, combined with high borrowing costs, have drained public resources and plunged many economies into a vicious cycle of debt, climate stress, and developmental pressures.
Among 39 African countries assessed in the IMF’s debt sustainability analysis for low-income economies, 21 are already experiencing debt distress or are at high risk of slipping into it. Yet, even this grim outcome underestimates the true extent of the problem, as the IMF framework systematically downplays the severity of vulnerabilities, particularly in climate-risk prone countries. Often, official ratings lag behind reality, only marking nations as “high risk” or “in distress” after crises erupt, as evidenced by Zambia, Ghana, and Ethiopia defaulting on their debts.
Climate change has turned an already unequal system into an even more unjust one. Despite Africa contributing less than 4% of global greenhouse gas emissions, it bears a disproportionate share of the consequences: droughts destroying crops, floods displacing millions, and storms obliterating entire communities.
Although it is the most vulnerable to climate shocks, African economies remain the least financially equipped to respond. The evidence is clear: the more a country is susceptible to climate shocks, the higher the borrowing costs it incurs. This “climate risk premium” inflates the capital costs borne by African governments, eroding their financial space and crowding out vital investments in health, education, and infrastructure. The result is chronic underinvestment that leaves countries more exposed to climate shocks.
While the IMF has noted that debt ratios have stabilized at a moderate level across Africa, this view overlooks the convergence of high debt burdens, acute climate risk vulnerabilities, and stalled progress toward development goals. Treating debt as “stable” while ignoring these interconnected crises poses the risk of creating a dangerous blind spot.
The insufficient response from the international community has further eroded African countries’ trust in their Western partners. Europe’s credibility, in particular, has suffered due to the EU’s failure to meet its climate commitments, reduce developmental aid, and address its evident double standards in crisis responses. While other powers—such as China, Russia, Turkey, and many Arab states—have steadily increased their presence on the continent, unresolved debt crises threaten to wipe out decades of progress, destabilize governments, and fuel migration as Africans seek opportunities abroad.
The rapidly changing geopolitical landscape today makes strong economic and political partnerships with African nations imperative. As the prosperity and stability of the EU become increasingly linked to those of Africa, policymakers cannot stand idly by while the continent endures multiple crises. European governments must leverage their substantial influence within the Bretton Woods institutions, the G20, and the G7 to reform the international financial system and prepare a coordinated and comprehensive response to the growing debt crisis.
The G20’s common framework for debt treatment, aimed at providing relief to countries struggling with debt, has been touted as a significant achievement. However, in reality, it lacks binding rules to ensure fair burden-sharing among all creditors and fails to address the structural causes of debt accumulation. Yet, debt relief is not a solution. As outlined in the Lomé Declaration, issued at the African Union’s debt conference in May, all creditors—private sector, bilateral lenders, and multilateral institutions—must be mandated to participate on equal terms.
Building on this momentum, African countries have formulated a common African position on debt, marking a significant milestone in the continent’s economic diplomacy. Now, Europe must engage on this basis and help translate this vision into tangible progress. With South Africa assuming the G20 presidency, placing debt sustainability at the heart of its agenda, a narrow window for action is opening that should not be squandered. Africa and Europe must work together to ensure that debt reform remains a top priority for the G20, the G7, the IMF, the World Bank, and the United Nations.
Rather than short-term reforms, Africa requires a new global initiative for debt relief that is ambitious, equitable, and tailored to match the continent’s unique realities. The potential gains are immense: debt relief could restore economic stability, free financial space for investment in essential services, and open new avenues for trade and growth.
It is crucial to recognize that the effects will extend beyond Africa. Genuine debt relief helps reduce poverty, expand access to education, and strengthen health systems, thereby shielding the world from future pandemics and humanitarian crises, alleviating migration pressures, and mitigating security threats.
Certainly, rising tensions among major global powers pose serious obstacles to debt relief. However, if Europe fully commits to this effort, achieving meaningful progress will be within reach. The costs will be far lower than those of another lost decade of developmental stagnation and instability. When Africa finally shakes off the burdens of debt, Europe—and the world—will rise alongside it.
