Citi sees three sovereign debt defaults in Africa in coming two years
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Senegal, Mozambique and Malawi could default on their debts in the next two years, Citi’s chief Africa economist David Cowan said on Thursday, as governments reel from the impact of the Iran oil price shock on their finances and economies.
Cowan said Africa is still not fully out of the woods on debt defaults, even after four sovereign restructurings since 2020 under the G20 initiative: Ghana, Zambia, Ethiopia and Chad. He said the continent has been hit by a mix of heavy debt burdens, economic mismanagement and external shocks ranging from the COVID-19 pandemic to Russia’s full-scale invasion of Ukraine.
Senegal remains in a difficult position after a hidden debt crisis uncovered in late 2024, and Cowan said the country could move into default in 2027 after managing to get through this year. Malawi and Mozambique could default this year, he said, pointing to sharp currency weakness that could push their debt burdens and hard-currency repayment costs into unsustainable territory.
He added that any defaults in Malawi and Mozambique could be resolved relatively quickly because Malawi has no international bonds and Mozambique has only one outstanding hard-currency bond. Malawi’s debt is largely owed to the World Bank, multilateral lenders and bilateral donors, he said.
Cowan also said Africa is coping better with borrowing costs in the Iran war-linked crisis than it did during previous shocks, pointing to the Democratic Republic of the Congo’s debut Eurobond issuance. He added that Kenya could allow its currency to weaken to absorb some of the depreciation pressure caused by higher crude oil prices.
