Navigating Debt: an analysis of SADC member states’ debt positions

In 2023, reports of Africa launching its own credit rating agency – ACRA (African Credit Rating Agency) picked up steam. The continent’s motivation for doing this is relatively simple – filling out the development financing gap they ascertain is holding most African countries back. Whilst we explored the motivations behind solving the problem, it would…


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In 2023, reports of Africa launching its own credit rating agency – ACRA (African Credit Rating Agency) picked up steam. The continent’s motivation for doing this is relatively simple – filling out the development financing gap they ascertain is holding most African countries back. Whilst we explored the motivations behind solving the problem, it would also be helpful to outline more solidly what the debt situation within Africa looks like taking a close look at the Southern African region which tends to be our focus area.

This report will therefore serve the purpose of outlining the debt status of Southern African countries (excluding Namibia and Seychelles) with a view to constantly updating in future. In addition to having the raw data outlined – we will also add explainers regarding why each section of the debt payments is important and how each section can possibly affect a country’s economy.

Naturally we will start by exploring the total external debts for 14 of the 16 SADC countries. Total external debt is the cumulative outstanding debt owed by a country to non-resident creditors.

Territory201020182019202020212022
Angola$26,796.0$61,791.0$62,292.0$65,387.0$66,087.0$60,107.0
Botswana$1,807.0$1,782.0$1,565.0$1,597.0$1,982.0$1,968.0
Comoros$278.4$240.0$259.3$296.6$350.3$368.7
DRC$6,127.0$5,826.0$6,487.0$7,084.0$9,186.0$9,432.0
Eswatini$1,016.0$766.0$834.0$957.0$1,179.0$1,211.0
Lesotho$788.0$1,463.0$1,583.0$1,738.0$1,833.0$1,810.0
Madagascar$2,756.0$3,720.0$4,045.0$4,841.0$5,345.0$5,938.0
Malawi$1,021.0$2,266.0$2,429.0$2,943.0$3,198.0$3,338.0
Mauritius$7,929.0$11,234.0$12,361.0$12,402.0$14,706.0$17,365.0
Mozambique$11,231.0$49,810.0$54,212.0$58,708.0$62,733.0$64,028.0
South Africa$115,322.0$180,184.0$190,738.0$175,417.0$169,438.0$172,133.0
Tanzania$8,937.0$22,363.0$24,174.0$25,546.0$28,506.0$30,170.0
Zambia$4,373.0$25,041.0$29,768.0$29,987.0$27,345.0$28,701.0
Zimbabwe$6,763.0$12,655.0$12,286.0$12,784.0$13,751.0$13,767.0
Note: All tabulated figures in US$ billion unless otherwise stated

Note II: Data for Namibia and Seychelles wasn’t available on World Bank databases

Total debt helps us ascertain among others, the country’s debt sustainability. In regards to this you ought to look at rapidly growing debt levels with concern as it can at times raise red flags regarding a country’s future prospects when it comes to its ability to meet future repayment obligations.

Beyond the debt sustainability, large debt stocks make countries more vulnerable to external events like global recessions, currency fluctuations or rising interest rates. Because all of these events can reduce a country’s ability to generate export earnings they have a domino effect of making it harder for a country to service its debt.

An oft cited example of this in the region is Zambia. The country is highlighted as having borrowed excessively in the 2010s – primarily from China. The goal of the borrowing was to finance infrastructure projects but unfortunately copper pricing around the world plummeted. Copper is a major export earner for Zambia which meant the country had a difficult time meeting debt service obligations. By 2020, Zambia’s debt-to-GDP ratio exceeded 100% (one of the signs that a country is in trouble). The fallout from this is still on-going and only recently (March,2024) did Zambia find what looks like a resolution i.e debt-restructuring the US$6.3bn debt it owes.

Long-term debt

Territory201020182019202020212022
Angola$20,926.0$57,586.0$57,848.0$57,044.0$55,575.0$50,330.0
Botswana$1,358.0$1,451.0$1,346.0$1,297.0$1,481.0$1,529.0
Comoros$248.5$216.5$226.6$252.9$285.7$309.8
DRC$4,583.0$4,778.0$4,976.0$5,212.0$5,414.0$5,351.0
Eswatini$733.0$685.0$747.0$748.0$857.0$930.0
Lesotho$709.0$1,369.0$1,504.0$1,616.0$1,633.0$1,614.0
Madagascar$2,054.0$2,984.0$3,218.0$3,612.0$3,811.0$4,441.0
Malawi$730.0$1,926.0$2,021.0$2,237.0$2,379.0$2,544.0
Mauritius$6,294.0$6,244.0$6,515.0$5,996.0$6,965.0$8,736.0
Mozambique$10,263.0$48,259.0$52,288.0$56,282.0$59,926.0$62,216.0
South Africa$80,499.0$129,833.0$143,773.0$131,374.0$122,284.0$118,855.0
Tanzania$6,922.0$19,416.0$21,081.0$22,121.0$23,586.0$24,436.0
Zambia$2,106.0$23,704.0$28,261.0$28,577.0$23,987.0$24,027.0
Zimbabwe$4,405.0$8,799.0$8,295.0$8,441.0$8,591.0$8,435.0

This is debt that has a maturity (original or extended) of more than one year. Whilst it shares a lot of the same characteristics with total debt one of the factors we didn’t touch on in the previous section is how debt affects creditworthiness. The long-term debt position can be used by creditors to ascertain whether or not borrowers are actually in a position to borrow again and if yes, the rates at which they can borrow.

Within the SADC region there have been instances where shaky long-term debt status affected ability to borrow. Angola’s oil-dependent economy has oft been affected by declining global oil prices and this led to a stricter program when Angola sought loans from the International Monetary Fund (IMF) in 2018.

Short-term debt

Debt that has a maturity of one year or less. Because this needs to be repaid quickly it has the unique risk-factor of being able to affect a country’s liquidity if a country doesn’t have enough readily available cash or assets that can be converted easily to cover the upcoming debt obligations. 

Territory201020182019202020212022
Angola$4,568.0$2,832.0$2,583.0$5,351.0$4,639.0$4,193.0
Botswana$360.0$251.0$139.0$218.0$156.0$112.0
Comoros$4.4$1.2$1.9$1.8$1.1$1.2
DRC$435.0$209.0$382.0$362.0$455.0$521.0
Eswatini$208.0$14.0$20.0$26.0$40.0$12.0
Lesotho$0.0$1.0$0.0$2.0$3.0$14.0
Madagascar$425.0$271.0$281.0$273.0$230.0$180.0
Malawi$43.0$25.0$68.0$178.0$146.0$91.0
Mauritius$1,485.0$4,855.0$5,712.0$6,267.0$7,414.0$8,318.0
Mozambique$610.0$1,248.0$1,549.0$1,738.0$1,860.0$785.0
South Africa$32,073.0$47,868.0$44,496.0$37,077.0$36,292.0$42,949.0
Tanzania$1,368.0$2,582.0$2,792.0$3,151.0$3,563.0$4,290.0
Zambia$1,150.0$623.0$840.0$732.0$1,390.0$2,615.0
Zimbabwe$1,829.0$3,385.0$3,523.0$3,855.0$3,738.0$3,980.0

Within the region Malawi has been cited as someone of the countries blighted by mismanagement of short-term debts. In the case of Malawi the country tends to go through cycles where they have alarmingly low foreign currency reserves and this has been at times attributed to their debt situation. The spike in their short-term debts from 2019-2022 also coincided with foreign currency shortage that saw the country’s central bank declare that their forex reserves were nearly empty at the midpoint of 2023. This is one of the reasons why Malawi entered the infamous deal to send citizens to work in Israel.

Disbursements

Territory201020182019202020212022
Angola$6,714.0$12,182.0$8,105.0$3,950.0$6,194.0$7,604.0
Botswana$17.0$47.0$48.0$90.0$336.0$201.0
Comoros$0.0$68.2$14.5$18.7$33.8$38.9
DRC$178.0$311.0$433.0$301.0$484.0$584.0
Eswatini$320.0$113.0$92.0$78.0$170.0$192.0
Lesotho$45.0$43.0$179.0$117.0$106.0$84.0
Madagascar$198.0$361.0$327.0$347.0$413.0$905.0
Malawi$81.0$223.0$168.0$193.0$245.0$340.0
Mauritius$2,568.0$3,861.0$2,794.0$1,636.0$3,164.0$2,150.0
Mozambique$3,810.0$4,238.0$4,364.0$4,139.0$10,104.0$6,156.0
South Africa$12,113.0$18,267.0$21,690.0$12,830.0$11,103.0$19,690.0
Tanzania$1,347.0$1,783.0$2,502.0$1,448.0$3,031.0$2,971.0
Zambia$251.0$5,326.0$6,584.0$3,318.0$493.0$1,423.0
Zimbabwe$847.0$1,001.0$983.0$911.0$806.0$302.0

Disbursements are drawings by the borrower on loan commitments during the specified year. These figures have a variety of use cases which include:

  • Predicting future debt burden & sustainability – because disbursements represent new additions to a country’s long-term debt stock. Tracking them helps anticipate the future debt burden the country will need to manage. This allows for proactive planning and ensures the country doesn’t take on more debt than it can realistically handle in the long run. A sudden surge in long-term debt disbursements can be a warning sign of potential debt sustainability issues especially if they are not accompanied by clear outlines on how the government in question seeks to bolster economic growth.
  • Market Confidence – Investors and lenders closely watch a country’s debt disbursement trends. High or uncontrolled disbursements can indicate potential financial mismanagement and erode investor confidence. This can lead to higher borrowing costs for the country in the future.
  • Financing Development – Disbursements can be a valuable tool for financing long-term development projects. Infrastructure projects, for example, may require significant upfront investment but can generate economic returns for decades, making long-term debt a worthwhile option.

Principal repayments (long-term)

Principal repayments on long-term debt are the amounts paid by the borrower in currency, goods, or services in the year specified.

Territory201020182019202020212022
Angola$2,639.0$9,141.0$7,803.0$5,129.0$7,574.0$12,564.0
Botswana$58.0$144.0$152.0$147.0$145.0$149.0
Comoros$3.1$2.0$1.8$1.8$1.1$1.2
DRC$89.0$181.0$196.0$161.0$257.0$528.0
Eswatini$34.0$41.0$31.0$82.0$49.0$100.0
Lesotho$19.0$51.0$37.0$44.0$66.0$54.0
Madagascar$39.0$81.0$76.0$82.0$105.0$109.0
Malawi$13.0$42.0$62.0$52.0$60.0$77.0
Mauritius$2,118.0$2,849.0$2,499.0$2,243.0$2,390.0$278.0
Mozambique$39.0$327.0$480.0$473.0$6,264.0$3,484.0
South Africa$3,474.0$21,654.0$13,796.0$20,614.0$19,847.0$20,453.0
Tanzania$132.0$640.0$784.0$866.0$1,243.0$1,534.0
Zambia$94.0$722.0$1,844.0$1,567.0$1,510.0$1,192.0
Zimbabwe$338.0$281.0$1,220.0$935.0$551.0$272.0

These payments can be interpreted in a number of ways;

  • Reduction of debt burden – Every principal repayment made towards a loan translates to a lower total amount owed. This has a snowball effect, leading to reduced future interest payments and ultimately brings the country closer to becoming debt-free. Depending on the nature of disbursements during the period in question these payments can also improve debt sustainability.
  • Potential indicator for fiscal responsibility – Tracking principal repayments acts as an indicator of a government’s fiscal discipline. Consistent repayments demonstrate a commitment to responsible financial management and prioritising debt reduction over excessive spending.

Interest payments (long-term)

Territory201020182019202020212022
Angola$257.0$2,704.0$2,820.0$2,571.0$2,236.0$2,525.0
Botswana$18.0$31.0$40.0$32.0$14.0$20.0
Comoros$1.1$0.9$0.4$1.5$0.5$0.5
DRC$124.0$46.0$773.0$59.0$54.0$116.0
Eswatini$17.0$15.0$22.0$20.0$15.0$27.0
Lesotho$8.0$17.0$24.0$16.0$262.0$238.0
Madagascar$16.0$33.0$36.0$37.0$39.0$72.0
Malawi$7.0$12.0$17.0$21.0$22.0$24.0
Mauritius$73.0$297.0$622.0$314.0$286.0$483.0
Mozambique$149.0$1,611.0$1,359.0$733.0$798.0$2,516.0
South Africa$2,177.0$6,241.0$6,563.0$6,243.0$5,904.0$5,588.0
Tanzania$51.0$309.0$381.0$350.0$324.0$417.0
Zambia$31.0$593.0$848.0$479.0$247.0$221.0
Zimbabwe$32.0$254.0$313.0$22.0$29.0$44.0

The interest payments are actual amounts of interest paid by the borrower in currency, goods, or services in the year specified. There are some factors that affect these amounts chief among which are interest rates – countries with high levels of debt are particularly vulnerable to interest rate hikes. If interest rates rise, the cost of servicing the debt increases, further straining the budget and potentially leading to a debt spiral.

The interest payments can also be used as a tool to gauge investor confidence. High interest payments can limit a country’s ability to invest in crucial areas projects within education, healthcare, infrastructure, or social sectors. This can hinder economic growth and development, ultimately affecting the country’s ability to generate future revenue. The level of interest payments relative to a country’s income (often expressed as a percentage of GDP) is also a key indicator of debt sustainability.

Debt service as % of exports

Debt service as a percentage of exports (often abbreviated as DS/X) is an important metric for countries because it helps assess their ability to manage their external debt.

Territory2022
Angola30.0%
Botswana2.0%
Comoros2.7%
DRC2.0%
Eswatini6.0%
Lesotho18.0%
Madagascar5.0%
Malawi12.0%
Mauritius8.0%
Mozambique63.0%
South Africa18.0%
Tanzania16.0%
Zambia12.0%
Zimbabwe5.0%

The metric has been suggested as being an indicator for the following (to a degree):

  • Measures Vulnerability – A high DS/X ratio indicates a significant portion of a country’s export earnings are going towards servicing debt (interest and principal payments). This leaves less money available for other crucial needs like imports, investments, or social programs.
  • Sustainability Indicator – DS/X is a good indicator of debt sustainability. A rising DS/X ratio over time could suggest the debt burden is growing faster than the economy’s ability to generate foreign currency through exports.

This report will be updated annually to reflect changes in SADC countries’ debt positions along with the real-world implications of these fiscal changes

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