In This Brief
A record flow of money is leaving developing countries to service debt. Behind the headline sits a quieter story about who gets to adapt to a hotter climate, and who has to choose between the lender and the farmer.
Every budget season, a finance ministry makes a quiet trade. Pay the loan on time, or fund the extension officer, the rural clinic and the flood channel. The ledger rarely shows that choice in one line, but the numbers published over the past year show how often the loan wins.
The World Bank’s International Debt Report 2025 found that developing countries paid out $741 billion more in principal and interest on external debt than they received in new financing across 2022 to 2024. In the Bank’s words, that is the largest gap in at least 50 years. These are figures for low and middle income countries as a group, not Africa alone, and China is the largest single debtor among them. Even so, the pressure lands hard on the continent.
A heavy number with a few lights in it
The picture is not all grim, and it would be inaccurate to say so. Creditors agreed to restructure $90 billion of external debt in 2024, the most since 2010. Bond markets reopened. The World Bank itself supplied $18.3 billion more in new money to IDA eligible countries than it took back in repayments, and a record $7.5 billion in grants.
Yet the Bank’s chief economist, Indermit Gill, was blunt: countries “should not deceive themselves: they are not out of danger.” Borrowing has simply shifted toward costlier sources as cheap bilateral lending dried up.
Africa holds less than 2 percent of the world’s public debt, according to UNCTAD’s A World of Debt 2025. The problem is not the size of the pile. It is the price of carrying it and what is left in the budget afterwards.
What the interest crowds out
UNCTAD counts 61 developing countries that put at least a tenth of government revenue into interest in 2024. Across the world, 3.4 billion people live in countries that spend more on interest than on either health or education. For Africa, the per person comparison is stark.
The trend is what worries analysts. A June 2026 UNCTAD report found that between 2014 and 2024 government interest payments in developing countries rose 102 percent while government revenues rose 39 percent. Interest is growing about 2.6 times faster than the income that must pay it.
Kenya shows what that looks like at home. Business Daily, reading the same UNCTAD data, reports that Kenya spends more on interest than on either health or education, with interest projected near Sh1.1 trillion for the 2025/26 financial year. A Boston University analysis of the UNCTAD figures found that 30 of 49 African countries with data spent more on interest than on public health in 2023.
Where the farm feels it
In The Connected Harvest, we argued that the farm was never the weakest link, and that the links around it were. Storage, rural credit, inputs, roads and extension are built by governments and lenders together. When debt service takes the first call on revenue, those links are the ones that wait.
The World Bank’s own analysis draws the line to the dinner plate. Among the 22 most indebted countries, where external debt exceeds 200 percent of export earnings, an average of 56 percent of people cannot afford a healthy diet. Across 90 low and lower middle income countries the average is 42 percent. The Bank presents this as an overlap between debt and hunger, not proof that one causes the other, and we do the same.
The climate surcharge
Climate risk adds its own line to the bill. A peer reviewed study in Oxford Open Economics by Gerhard Kling, Yuen Lo, Victor Murinde and Ulrich Volz tracked sovereign borrowing costs for 46 countries from 1996 to 2016. Climate vulnerable economies in the V20 group paid on average 1.174 percentage points more for debt. The authors estimate that 40 V20 members paid an extra $62 billion in interest between 2007 and 2016 because of that exposure.
An earlier version of the paper put it plainly: for every ten dollars of interest these countries pay, roughly one more is the price of being climate vulnerable.
The study also found that investing in education and infrastructure lowered borrowing costs. Resilience is not only a cost. It can be a discount.
Money that arrives as debt
The cruel loop is that climate money often comes as a loan. Climate Policy Initiative’s 2024 landscape found that Africa’s tracked climate finance rose 48 percent to $43.7 billion in 2021 and 2022, yet only 23 percent of needs were met. International sources supplied 87 percent, mostly as debt, despite the region’s debt vulnerability.
Adaptation, the part that protects harvests, is the thinnest slice. UNEP’s Adaptation Gap Report 2025 shows international public adaptation finance fell from $28 billion in 2022 to $26 billion in 2023. Using UNEP and CPI data, Zero Carbon Analytics notes that Sub Saharan Africa needs about $51 billion a year for adaptation but received $12.9 billion in 2023.
UNEP’s authors say grants and other concessional, non debt instruments will be essential for adaptation because of the risk of over indebtedness. Put simply, a drought proofing project should not push a country closer to default.
Can debt swaps help?
A debt for nature or debt for climate swap replaces expensive debt with cheaper debt, and the savings are pledged to conservation or resilience. Africa’s landmark case is Gabon. In 2023 it bought back $500 million of bonds for $436 million, according to Moody’s, and refinanced them with a new loan funded by blue bonds. The bonds were about 4 percent of Gabon’s debt, and the US development finance agency DFC put the savings at $125 million.
Critics note that high transaction costs eat into the savings, and that Gabon mainly swapped short term debt for longer maturities. The Nature Conservancy’s Slav Gatchev replies that the product is easy to misjudge. The Seychelles did an earlier swap, and Kenya has been among the countries studying the idea.
The scale is the honest limit. Gabon’s deal was a bit under 0.07 percent of the $741 billion net outflow. In March 2026 the Conservancy told Reuters it was in talks with three African countries on swaps worth $500 million combined, after none since US support was curtailed. Swaps can help at the margin, but they cannot replace cheaper borrowing for the whole system.
What to do next
The evidence points to moves that each actor can start now.
- Treasuries and parliaments. Publish debt and interest data in budget papers next to extension, storage, irrigation and rural road lines, so citizens can see the trade. The IDR notes that debt transparency has improved in recent years, and it can improve further.
- Development lenders and climate funds. Lead with grants and concessional terms for adaptation, and build in pauses for disasters. The UN expert group behind A World of Debt 2025 backs normalising debt service pauses and reforming the G20 Common Framework.
- Investors and domestic capital. Back long tenor, local currency instruments for agriculture and resilience. CPI urges stakeholders to catalyse private finance, including domestic sources, and to point grants at adaptation and land use.
- Farmer groups and counties. Ask what your budget spends on interest versus extension and storage, then organise into cooperatives that can access blended and pooled finance as one larger, safer borrower.
The data tells a consistent story. Debt is not the enemy, and UNCTAD says plainly that public debt can be vital for development. But when its price rises faster than income, and when climate risk raises the price again, the farm pays at the end of the chain. Fixing the terms of borrowing is as much a harvest strategy as better seed.
