ECA in its 2019 Economic Report on Africa (ERA) revealed that about 40% of low-income countries now face debt servicing challenges, and an increasing number of countries are at high risk of debt distress or in debt distress.
The report examines the institutional and policy reforms required to enable African countries to maximise domestic resource mobilisation.
According to the report, five African nations are already in debt distress. These are Chad, Mozambique, South Sudan, Sudan and Zimbabwe. In 2014, none was in debt distress.
To narrow the debt margin, the Economic Commission advised Africa nations “to increase the mobilisation of tax and non-tax revenue and deepen the domestic capital market with increased reliance on local currency—denominated loans.”
The report lists these eleven countries that may soon fall into debt trap unless something is done to raise revenue through tax reforms, non-tax revenue, enhanced tax administration and reduced tax evasion:
- Cabo Verde
- Central African Republic
- São Tomé Príncipe