Africa’s Debt Crisis Has ‘Catastrophic Implications’ for the World

After a new tax increase incited weeks of deadly riots in Kenya early this summer, President William Ruto announced that he was reversing course. He abandoned the finance law he had proposed, and then he shook up his cabinet.

Last week, the government reversed itself again. The newly appointed finance minister announced that some of those discarded tax increases would be reintroduced.

The Ruto administration is desperately trying to raise revenue to pay off billions of dollars in public debt and avoid defaulting on its loans, even as critical public assistance and services are being cut.

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The continent’s foreign debt reached more than $1.1 trillion at the end of last year. More than two dozen countries have excessive debt or are at high risk of it, according to the African Development Bank Group. And roughly 900 million people live in countries that spend more on interest payments than on health care or education.

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In Nigeria, where foreign debt amounts to $40 billion, rising inflation and widespread hunger spurred a string of violent antigovernment protests this month. Forty percent of the country’s 220 million people live in extreme poverty. Yet more than a third of the revenue collected by the government is used to pay the interest on its public debt.

In Uganda, where foreign creditors are owed $12 billion, demonstrations in July targeted corruption. And in Kenya, which has $35 billion worth of external debt, some protesters have said they are ready to march again after the latest news of impending tax increases.

In many African countries, there has been zero per capita income growth in the past decade. The debt crisis has caused the value of many currencies to depreciate, further sapping purchasing power.

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In recent decades, the pool of potential lenders has exploded to include thousands of private bondholders and a major new geopolitical player: China.

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Many nations, bristling at loan conditions dictated by Western lenders or the International Monetary Fund, were eager to find an alternative source of financing. Agreements with China often came without environmental, financial or human rights restrictions, though they were more opaque so difficult for outsiders to assess.

China now accounts for 73 percent of bilateral borrowing in Kenya, 83 percent in Nigeria and 72 percent in Uganda, according to the United Nations Conference on Trade and Development.

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