David Cowan,Citi’s Chief Africa Economist has cast a spotlight on renewed sovereign debt risks across Africa, as rising oil prices linked to tensions with Iran squeeze already fragile public finances.
Speaking on Thursday, the Citi economist said Senegal, Mozambique and Malawi could face debt defaults within the next two years, with some at risk as early as 2026. Governments across the continent are grappling with the economic fallout of higher crude prices, which have pushed up import bills, weakened currencies and increased the cost of servicing foreign debt.
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“Africa is still not entirely out of the woods yet in terms of the debt defaults,” Cowan said during a briefing, according to Reuters.
The warning underscores how external shocks continue to expose long standing structural weaknesses in many African economies. Since 2020, four countries — Ghana, Zambia, Ethiopia and Chad — have defaulted and entered debt restructuring under the G20 framework. These crises were driven by a mix of heavy borrowing, policy missteps and global disruptions ranging from the pandemic to the war in Ukraine.
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Cowan pointed to Senegal as a growing concern, describing the country as being in “a pretty big mess” after a hidden debt crisis emerged in late 2024. While it may avoid default in the immediate term, he warned it could still tip over by 2027.
For Mozambique and Malawi, the risks appear more immediate. Both countries have seen sharp currency declines, raising the local cost of repaying dollar denominated debt and pushing their obligations towards unsustainable levels.
Even so, Cowan suggested that any defaults in the two southern African economies could be resolved relatively quickly. Malawi’s debt is largely owed to multilateral and bilateral lenders such as the World Bank, while Mozambique has only one outstanding hard currency bond.
“Malawi’s debt is largely owed to the World Bank, multilateral and bilateral donors,” he said, according to Reuters.
Despite the renewed risks, there are signs that market conditions are not deteriorating as sharply as in previous crises. Cowan noted that borrowing costs have remained relatively contained, even amid the current oil shock. He pointed to Democratic Republic of the Congo, which recently issued its first Eurobond, as evidence that investor appetite for African debt has not fully retreated.
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Elsewhere, Kenya may allow its currency to weaken to absorb pressure from higher oil prices, a move that could help cushion external shocks but risks fuelling inflation at home.The broader picture is one of cautious resilience.
While African economies are better positioned than in past crises, the combination of global volatility and domestic vulnerabilities means the threat of another wave of defaults has not disappeared.
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