As interest payments eclipse basic services across the continent, Daouda Sembene, former IMF Executive Director and CEO of AfriCatalyst, outlines how African economies can restore fiscal sovereignty, credibility, and growth. In an exclusive interview, he shares a blueprint for reform — from domestic revenue to multilateral dysfunction.
As governments across Africa battle shrinking reserves, rising spreads and surging debt repayments, the continent’s fiscal model is under strain. Public debt now consumes more than half of annual revenues in over a dozen countries, with some spending more on interest than on health or education. For Daouda Sembene, one of the continent’s leading macroeconomic thinkers, the message is simple: reform can’t wait.
Sembene spent over a decade at the heart of global financial governance, representing 23 African countries at the International Monetary Fund and helping steer G20 coordination during some of the region’s toughest debt negotiations. Now based in Dakar, he heads AfriCatalyst, an advisory firm working with African governments and multilateral institutions to strengthen fiscal architecture and debt sustainability. He spoke to Allen Dreyfus the morning after convening senior officials from 16 West African countries to discuss credit ratings, multilateral lending, and fiscal resilience.
“The first most important reform is to very much take steps to boost domestic revenue,” he says. “One of the reasons the continent is in the situation it is, is because we haven’t been effective in mobilising enough,” he tells Allen Dreyfus.
The data supports his diagnosis. According to the African Tax Administration Forum, average tax-to-GDP ratios remain stuck at around 16%, well below the 34% OECD average. In Uganda, the government has set a 2030 target of 18%, up from 13% today. WAEMU states have made steady gains over the past decade, while Rwanda and Benin have led digitalisation efforts to broaden their tax bases. But across much of the continent, fiscal authorities remain under-resourced and politically constrained.
Sembene argues that revenue reform must go hand-in-hand with stronger debt management and greater transparency. “You want to make sure you have a strong debt management framework,” he says. “And that’s not just about strategy, but about institutions—capacity, staffing, transparency.” In many capitals, debt offices remain fragmented and underpowered, with unclear mandates and weak lines of communication between ministries. “In some countries you’ll see both the finance ministry and the economic ministry involved in contracting and disbursement,” he adds. “If there isn’t coordination, dysfunction is inevitable.”
These weaknesses feed directly into higher borrowing costs. Ghana, was paying yields of over 15% in early 2022—despite not having defaulted at the time—while similarly rated European countries secured credit at single-digit rates.
According to AfriCatalyst analysis, this mispricing reflects more than just risk. It stems from structural factors: rating agency bias, investor herd behaviour, and the absence of credible long-term growth signals. “You also need to improve investment management capacity,” says Sembene. “If you come up with infrastructure projects that aren’t well formulated or planned, you’re setting yourself up for trouble.”
Roughly 80% of African infrastructure proposals fail before reaching financial close, according to Brookings data. World Bank figures show that poor infrastructure planning shaves up to two percentage points off annual GDP growth across the region. The costs are felt not just in wasted capital—but in stunted productivity, reduced competitiveness, and a narrowing path to long-term development.
Tensions at the heart of sovereign strategy
But while governments struggle to invest, they face escalating debt service costs and a harsh external environment. “African countries have urgent priorities—basic social services, infrastructure—and at the same time, an adverse international context,” says Sembene. He cites COVID-19’s fiscal aftershocks, climate instability, and mounting security pressures that have forced states to divert resources to military spending. The result is a balancing act that few governments can sustain. “For countries that still need to go to the market and issue eurobonds, it’s extremely difficult to find the right path,” he says.
One route forward may lie in newer, more flexible financing tools. From climate-linked bonds and resilience clauses to debt-for-nature swaps, international interest is growing. Gabon, Belize, Barbados, and the Seychelles have already issued instruments that tie repayment to climate or conservation outcomes. But Africa lags behind. “We’re not doing it enough,” Sembene says. “There’s a scarcity of credit enhancement tools. Governments, multilaterals, DFIs—we all have a role in pushing this.”
He sees promise in coordinated, concessional platforms that can help reduce repayment pressures during shocks, while preserving access to capital for critical investments. “This is definitely needed—and it can be done,” he says. “Latin America and Asia have done it. We need to replicate that success.”
Another area of reform lies in credit ratings. The African Union has backed the creation of an African credit rating agency—designed to offer more grounded, context-specific assessments and reduce reliance on the big three. But Sembene is cautious. “It needs to be credible. Independent. Trustworthy to investors,” he says. “Otherwise it won’t be effective.”
MDB reform, disbursement failure, and the road ahead
Multilateral lenders remain critical to Africa’s financing landscape—but their role is under scrutiny. “They offer the most affordable rates for African countries, and we need more of that—not less,” Sembene says. “But we also need them to disburse more. That’s the real bottleneck.”
While the African Development Bank approved a record $11 billion operational budget in 2025, internal evaluations show that only 23–49% of investment loans are typically disbursed. Even high-performing policy loans struggle to exceed 80%. The World Bank, too, has faced criticism for long approval lags and low disbursement rates across African projects.
Sembene sees opportunity in the G20’s push to reform MDB balance sheets. “There’s a need for more investment support facilities. For better project preparation. For stronger risk mitigation tools that can bring in private capital,” he says. “And for a rethink of how we structure and release funds.” Without such changes, concessional lenders may find themselves increasingly bypassed by African borrowers turning to more flexible—if more expensive—sources.
Still, the solution isn’t about replacing multilaterals, but making them more responsive. “You need capacity building. You need transparency. And you need to reduce the gap between approval and delivery,” Sembene says. That means deeper country engagement, better pipeline design, and more adaptable instruments—especially in fragile states where disbursement delays can tip projects into failure.
Ultimately, Sembene believes that escaping the debt trap requires simultaneous reform on multiple fronts: domestic resource mobilisation, institutional capacity, multilateral transformation, and financial innovation. “It takes a joint effort,” he says. “Governments. Multilaterals. Investors. Everyone has a role to play.”
Whether that effort can coalesce in time may define not just Africa’s next debt cycle—but its ability to fund a different future entirely.
