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Africa
It is not just loans from China and Western financiers. Domestic borrowing is surging. ... Then there is the borrowing that few people will mention at the G20-domestic debt. African countries' domestic borrowing has surged, according to the Kiel Institute for the World Economy, a German research group, which last month launched the first comprehensive database of African debt. Its accompanying paper notes that outstanding domestic issuance has risen from $150bn in 2010 to nearly $500bn in 2024, more than from any external source.
The researchers call this "a major transformation in the composition of sovereign liabilities" . ... Around half of total government debt in sub-Saharan Africa is owed to domestic banks, according to the IMF. ... In theory, borrowing in local currency avoids the "original sin" of sovereign debt: the risk that your currency depreciates relative to the dollar, making repayment harder. "A well-functioning domestic market can be displayed to build market confidence for a foreign investor," says Ka Lok Wong, one of the authors of the Kiel Institute paper. ... Yet the interest rates on domestic loans are usually three to six percentage points higher than on external concessional loans, ...
