Deputy Governor of the Bank of Uganda, Prof. Augustus Nuwagaba, has called on African countries to prioritise trade-led growth over excessive borrowing, warning that rising public debt across developing economies is constraining investment in critical social sectors.
In remarks shared this week, Prof. Nuwagaba noted that developing countries owed an estimated $11.7 trillion in public debt in 2024, spending about $1.6 trillion of government revenue on debt servicing alone. He said more than three billion people live in countries that allocate more resources to debt repayment than to health or education.
He attributed the strain not only to domestic fiscal pressures but also to structural imbalances in the global financial system, where developing nations borrow at interest rates two to four times higher than advanced economies. As global interest rates rise, he warned, poorer countries are the first to feel the impact.
While acknowledging the importance of debt relief initiatives, Prof. Nuwagaba argued that sustainable recovery depends on expanding production and trade rather than austerity. “Relief without growth is just buying time,” he said, emphasising that long-term debt sustainability requires stronger export capacity and industrial output.
He pointed to the rapid growth of South–South trade, now valued at $5.7 trillion and accounting for nearly a quarter of global trade, as evidence of untapped potential. Trade among developing countries has expanded faster than trade among advanced economies for over two decades.
Prof. Nuwagaba added that full implementation of the African Continental Free Trade Area could raise intra-African trade by more than 50% over time, boosting jobs, tax revenues and economic resilience without increasing borrowing.
He concluded that growth remains the most effective debt strategy for African economies.