In this article, we’ll discuss the top 10 heavily indebted economies to understand what made them so economically bound. If you want more insights about foreign corporations’ role in these countries, read 30 Heavily Indebted Poor Countries.
10. Cameroon
External Debt Stocks: $16.003 billion
GNI Per Capita: $4350
Below $2.15 Poverty Rate: 25.7%
Composite Ranking: 10
With external debt stocks at $16.003 billion, Cameroon has an economy deeply tethered to crude oil and agriculture, resulting in fiscal volatility due to fluctuating commodity prices. While cash crops like cocoa, coffee, and cotton are significant for employment and export revenues, the country needs to focus on value addition to its exports to navigate economic challenges effectively.
9. Uganda
External Debt Stocks: $19.217 billion
GNI Per Capita: $2650
Below $2.15 Poverty Rate: 42.2%
Composite Ranking: 9
Uganda’s primarily agrarian economy is hampered by a narrow export portfolio consisting mainly of coffee, tea, and cotton. Despite having a youthful population, the prevalence of an informal economy limits skilled labor availability. The restricted industrial base further narrows employment opportunities, perpetuating poverty amidst a per capita GDP of $964.
8. Zambia
External Debt Stocks: $20.046 billion
GNI Per Capita: $3680
Below $2.15 Poverty Rate: 61.4%
Composite Ranking: 8
Zambia’s reliance on its over-exploited copper reserves makes it vulnerable to global economic changes. The combination of escalating debt and governance challenges hinders the possibility of robust economic growth. This significant debt burden restricts the government’s investment capabilities in essential sectors like education, healthcare, and infrastructure, which are crucial for poverty alleviation.
7. Sudan
External Debt Stocks: $22.165 billion
GNI Per Capita: $4150
Below $2.15 Poverty Rate: 15.30%
Composite Ranking: 7
The 2011 secession of South Sudan significantly impacted Sudan’s economy, leading to the loss of a considerable portion of its oil reserves, a critical source of foreign exchange and government revenue. This loss has constrained the government’s fiscal capability, resulting in accrued debt as it struggles to meet budgetary needs. Notably, for a long time, Sudan had limited access to international markets and financing due to sanctions imposed over human rights violations and conflicts.
6. United Republic of Tanzania
External Debt Stocks: $28.49 billion
GNI Per Capita: $3040
Below $2.15 Poverty Rate: 49.9%
Composite Ranking: 6
Tanzania’s significant debt burden partly stems from its ambitious infrastructure and development projects, crucial for long-term growth. For instance, the Deutsche Bank AG has recently announced to grant a loan of $330M to Tanzania for its infrastructure development projects. These initiatives, however, necessitate substantial capital, often sourced through external borrowing. The returns on these investments materialize over time, whereas debt repayments exert immediate pressure on the national budget.
5. Senegal
External Debt Stocks: $28.931 billion
GNI Per Capita: $4100
Below $2.15 Poverty Rate: 39%
Composite Ranking: 5
Senegal boasts a more diversified economy than its neighbors, with fisheries, agriculture, and tourism as its key sectors. However, the high poverty rate and growing external debts hinder its progress. Furthermore, Senegal’s infrastructure is lacking, ranking 141st out of 167 countries on the Aggregate Logistics Performance Index.
4. Côte d’Ivoire
External Debt Stocks: $29.752 billion
GNI Per Capita: $6330
Below $2.15 Poverty Rate: 39.5%
Composite Ranking: 4
Côte d’Ivoire, one of West Africa’s fastest-growing economies, struggles with unequal income distribution. Urban areas, especially the economic capital Abidjan, enjoy higher income levels, whereas rural regions are mired in poverty. Limited access to essential services like education, healthcare, clean water, and sanitation in these areas adversely affects quality of life and perpetuates poverty.
3. Ethiopia
External Debt Stocks: $30.017 billion
GNI Per Capita: $2800
Below $2.15 Poverty Rate: 27%
Composite Ranking: 3
With a per capita GDP of $1027, Ethiopia sees 27% of its population living in extreme poverty. The nation has borrowed extensively to finance vital development and infrastructure projects, incurring around US$13.7 billion in debt to China, primarily through China Exim Bank from 2000 to 2021. Although these initiatives have spurred economic growth, they have also compelled the government to levy substantial taxes, exacerbating poverty.
2. Ghana
External Debt Stocks: $36.182 billion
GNI Per Capita: $6380
Below $2.15 Poverty Rate: 25.2%
Composite Ranking: 2
Mining constitutes 5% of Ghana’s $78 billion GDP, with gold mining being predominant. Despite being the world’s sixth-largest gold producer, the country’s mining towns are steeped in poverty, primarily due to illegal or largely unregulated mining.
1. Mozambique
External Debt Stocks: $62.819 billion
GNI Per Capita: $1410
Below $2.15 Poverty Rate: 64.6%
Composite Ranking: 1
With a per capita GDP of $541, nearly 65% of Mozambique’s population endures hardship. The nation’s economy, heavily reliant on agriculture, is burdened by its enormous debt, evidenced by its external debt stocks, as reported in the International Debt Report 2022.
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