African multilateral lenders have launched a continent-wide early warning system aimed at spotting the first signs of sovereign debt distress amid mounting concerns about a looming debt crisis.
The tool, developed by the Alliance of African Multilateral Financial Institutions (AAMFI), is intended to help regions lenders coordinate support for countries under strain and reduce the risk of protracted disputes during debt restructurings.
According to International Monetary Fund (IMF) data cited by africanews.com, African economies are due to service close to $96 billion in external debt obligations in 2026, putting pressure on public finances already stretched by volatile currencies, high interest rates, and climate-related shocks.
AAMFI chairman Samaila Zubairu on Friday said that the initiative would allow African lenders to act earlier and more collectively when countries begin to show signs of stress.
“We have developed an early warning or debt distress signal detection system that allows us to provide collective support to countries in difficulty and to design instruments that can help ease stressed situations,” Bloomberg quoted Zubairu as saying.
AAMFI brings together seven regional institutions, including AFC, African Export-Import Bank (Afreximbank), Trade and Development Bank (TDB), Africa Re, African Trade & Investment Development Insurance (ATIDI), Shelter Afrique Development Bank, and ZEP-RE.
As at print time, the alliance is yet to disclosed how the early warning system will operate in practice. Details on the indicators it will track, how risks will be assessed, or how the tool will be deployed across member institutions and borrowing countries remain uncertain.
Lessons from Ghana and Zambia
The launch follows contentious debt restructuring processes in Ghana and Zambia, which exposed tensions between African multilateral lenders, sovereign borrowers, and international credit rating agencies.
Both countries sought debt treatment under the G20 Common Framework, established after the Covid-19 pandemic to coordinate relief for low-income economies. While the IMF, World Bank, and African Development Bank were protected from losses due to their multilateral status, Ghana and Zambia argued that some regional lenders should also participate in debt relief.
In December 2025, Afreximbank agreed to absorb losses on a $750 million loan to Ghana, breaking a deadlock that had stalled the country’s wider debt restructuring talks.
That decision later weighed on the bank’s own credit standing. Last week, Fitch Ratings downgraded Afreximbank’s long-term issuer rating to BB+ from BBB-, pushing it into speculative-grade, or “junk”, territory.
Fitch also said it would stop rating the Cairo-based lender, formalising a split that came days after Afreximbank announced it was severing ties with the agency. The bank argued that Fitch’s assessments failed to reflect its pan-African mandate and legal framework.
Dispute over preferred creditor status
Zambia’s restructuring process has also underscored disagreements over “preferred creditor status” — the principle that multilateral development banks are repaid ahead of other lenders and are not required to take losses.
Afreximbank has launched arbitration proceedings against Zambia to defend its claim to this status. The IMF has previously stated that development banks cannot unilaterally declare themselves preferred creditors and that such status is not recognised for lenders with private shareholders.
TDB has taken a more flexible stance, buying out non-sovereign shareholders to meet eligibility requirements and entering talks with Zambia to restructure its exposure.
Debt risks remain elevated
The IMF in its latest World Economic Outlook forecast that sub-Saharan Africa will grow by 4.6% in both 2026 and 2027, outpacing Europe and North America. But it has warned that debt pressures, climate shocks, fragile reforms, and uneven integration into the global economy pose significant risks.
An Afreximbank report published in February 2025 identified nine African countries — including Ghana, Zambia, Zimbabwe, and Mozambique — as already in debt distress, with 19 others classified as high risk.
Against this backdrop, AAMFI’s early warning system signals a push by African lenders to detect problems sooner — even as questions remain over how the tool will work in practice and how quickly it can be deployed.
