A recent report by the Nigerian Economic Summit Group (NESG) and the Open Society Initiative for West Africa declared Nigeria and 10 other African countries within the Economic Community of West African States (ECOWAS) to be in a debt crisis based on a debt sustainability analysis.
Driving the news
The 10 ECOWAS countries listed alongside Nigeria in the debt crisis are Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea Bissau, Liberia, Niger, Senegal, and Togo. However, Côte d’Ivoire, Guinea, Mali and Sierra Leone’s debt situation is relatively low.
- The debt sustainability analysis considered Debt to GDP, External Debt to GDP, Debt Service to Revenue and many others to determine the current situation of these countries.
State of play
The debt crisis, especially in Nigeria as determined by the report, might pose a serious threat to the entire West African region. This is due to the fact that between January – March 2021, 97% of Nigeria’s revenue serviced debts.
- This situation therefore shows a potential cycle of borrowing to service debt, which negatively affects both public and private investments, foreign investment channels, and the stability of the macro-economy at large.
According to Statista, as of June 2021, 15 countries in West Africa had a total debt of $164.1 billion, with Nigeria and Ghana leading the charts with the highest public debts in the region.