African countries will pay $74-billion in debt service payments this year, which is a sharp increase from $17-billion in 2010, and the continent's economic potential is being undermined by non-transparent resource-backed loans that complicate debt resolution and compromise countries' future growth.

"It is time to have accountability for debt transparency and ensure that opaque natural resource-backed loans end, because they complicate the debt issue and the debt resolution issue," said development finance institution African Development Bank (AfDB) president Akinwumi Adesina.

Adesina acknowledged the fiscal pressures faced by African nations owing to the Covid-19 pandemic, infrastructure needs, and rising inflation, but emphasised the need to address the structural issues in Africa's debt landscape.

He also highlighted the shift from concessional financing to more expensive and short-term commercial debt, with Eurobond debt now accounting for 44% of Africa's total debt, up from 14% to 17% previously.

Africa's ballooning external debt, which reached $824-billion in 2021, poses challenges, with countries dedicating 65% of their gross domestic product to servicing these obligations, he said on the sidelines of the International Monetary Fund and World Bank 2024 Spring Meetings.

It was important to put in place an orderly and predictable way for dealing with Africa's debt, and Adesina urged for faster implementation of the G20 Common Framework.

Additionally, he criticised the higher borrowing costs for African nations, and called for an end to unfairly skewed risk perceptions.

“There is also a need to increase concessional financing, particularly for low-income countries. Africa's level of concessional financing has shrunk significantly.”

However, the AfDB's concessional lending African Development Fund is providing long-term financing at low interest rates to the 37 most vulnerable countries, he adds.

Further, there were various instruments and initiatives employed by the AfDB to derisk projects and attract institutional investors, such as partial credit guarantees, hybrid capital, and synthetic securitisation, he highlighted.

Meanwhile, in a separate session at the 2024 International Monetary Fund/World Bank Spring Meetings, US Treasury international finance assistant secretary Brent Neiman highlighted the US government’s efforts to assist African countries in reducing debt loads.

He noted that Benin, Côte d'Ivoire and Kenya had issued almost $5-billion in bonds since the beginning of 2024, at interest rates ranging from 8% to 10%. This was evidence that emerging economies remained able to tap capital markets, he said.

Further, the Global Sovereign Debt Roundtable was instrumental in bringing together creditors and debtors to tackle rising debt burdens in developing countries, Neiman said.