Citi Predicts Three Sovereign Debt Defaults in Africa

Citi’s Chief Africa Economist David Cowan has warned that Senegal, Mozambique and Malawi could face sovereign debt defaults within the next two years as governments grapple with the fallout from an Iranian oil price shock and pre-existing fiscal vulnerabilities.

Speaking at a news briefing on Thursday, April 16, 2026, Cowan said the three countries are particularly exposed due to a combination of currency weakness, hidden debt burdens, and limited access to international financing, which could push their debt servicing costs into unsustainable territory.

Country-Specific Risks and Vulnerabilities

For Malawi and Mozambique, the primary threat stems from significant weakening of their respective currencies, which could exacerbate existing debt stocks and increase the cost of servicing hard-currency loans. Cowan noted that Malawi’s debt is largely owed to the World Bank, multilateral, and bilateral donors, while Mozambique has only one outstanding hard-currency bond in circulation. This limited exposure to international bond markets could allow for a quicker resolution should a default occur.

Senegal faces a different challenge, as it continues to address a “hidden debt” crisis uncovered in late 2024. Cowan described the country’s fiscal situation as “a pretty big mess,” suggesting it may struggle to stabilize its finances in the near term and could be headed toward a default in 2027 after managing to avoid one this year.

Historical Context and Broader Implications

Since 2020, Africa has experienced four sovereign debt defaults that were restructured under the G20 Common Framework: Ghana, Zambia, Ethiopia, and Chad. These defaults were driven by a combination of heavy debt burdens, economic mismanagement, and external shocks, including the COVID-19 pandemic and Russia’s full-scale invasion of Ukraine.

Cowan emphasized that Africa is “still not entirely out of the woods yet in terms of the debt defaults,” highlighting the continent’s ongoing vulnerability to global economic pressures. However, he noted some positive developments, such as the Democratic Republic of the Congo’s debut Eurobond issuance and Kenya’s potential to let its currency weaken to absorb depreciation pressure from elevated crude oil prices.

The warning underscores the precarious financial position of several African nations amid a “two-speed” economic reality, where some countries are seeing credit rating improvements and growth while others are hitting a “wall of external debt,” forcing difficult budgetary trade-offs in a fragmented and politically unstable international environment.