Zimbabwe has slid deeper into Africa’s most dangerous debt zone, joining a cluster of war-ravaged and structurallybroken economies now classified among the continent’s worst debt-distressed states, according to a paper jointly prepared by the United Nations Development Programme, the African Union, the Economic Commission for Africa and the African Development Bank (AfDB).
The development exposes the scale of Harare’s long-running fiscal crisis and the growing risks attached to African governments’ borrowing spree.
Zimbabwe’s Treasury and multilateral estimates placed Zimbabwe’s public and publicly-guaranteed debt at about US$23 billion at the end of last year.
It is the equivalence of nearly half of the country’s gross domestic product (GDP) estimated at around US$50 billion.
But analysts argue the effective burden is far heavier once contingent liabilities, state guarantees, legacy arrears, and quasi-fiscal obligations are taken into account.
That debt overhang has increasingly alarmed major international institutions, particularly as Zimbabwe remains locked out of concessional global capital markets due to unresolved arrears owed to the World Bank, AfDB and other multilateral lenders.
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In the joint report titled The Impacts of the Middle East Conflict on African Economies, the agencies grouped Zimbabwe among Congo Republic, Djibouti, Ethiopia, Malawi, Sao Tome and Principe and Sudan. Some of the countries battling severe fiscal instability, restructuring crises, foreign currency shortages or conflict-induced economic collapse.
The revelations marked a deterioration in sovereign risk perception at a time authorities are attempting to re-engage creditors while simultaneously expanding infrastructure financing and private sector borrowing.
Economists say the biggest danger is no longer the size of the debt, but the quality of the obligations being accumulated.
Zimbabwe’s debt burdenhas also moved towards private sector-linked obligations, many of which carry shorter repayment periods and significantly higher risk.
The Zimbabwe Investment and Development Agency said in its first quarter report that foreign currency-denominated debt financing surged to a record US$431,37 million during the first quarter of 2026 — almost double the previous peak recorded in the final quarter of 2025.
The sharp increase reflects growing dependence on debt-funded investment as firms scramble for capital in a market where long-term equity financing remains scarce.
“Debt financing reached its highest level in Q1 2026 at US$431,37 million, nearly double the peak recorded in Q4 2025,” Zida said.
“This indicates an increasing reliance on leveraged financing, possibly reflecting improved confidence in the financial system’s capacity to support loan servicing and repayment.”
While authorities and some analysts interpret the figures as evidence of improving confidence, others warn the trend exposes deep structural weaknesses within Zimbabwe’s financing architecture.
Africa Economic Development Strategies executive director Gift Mugano said the surge in borrowing reflected stronger liquidity conditions and increased productive sector activity.
“First, it demonstrates that there is sustained support by the financial sector to the real sector,” Mugano told the Zimbabwe Independent.
“When you talk about a doubling of lending, you have to remember that this is debt financing — companies borrowing from banks. It is not equity financing; it is still credit-driven. So it is encouraging, as it points to improving liquidity.”
He said the figures also suggested productive sectors were beginning to absorb more financing.
“If you look at the central bank’s monetary policy or financial reports, it will show you that 75% of total loans going to the markets are always production-orientated,” Mugano said.
But other analysts said the debt expansion reflects a dangerous pattern increasingly visible across Africa.
Economies are borrowing aggressively simply to sustain activity levels amid weak domestic savings, low export earnings and limited fiscal space.
Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer Christopher Mugaga warned recently that growing sovereign guarantees attached to private infrastructure projects could worsen already fragile public finances.
In its latest submission to government, the business lobby said excessive guarantees effectively transferred commercial risk from investors to taxpayers.
“The central issue arising from General Notice 338 of 2026 is risk allocation,” ZNCC said.
“Where a private project is highly leveraged and dependent on a government guarantee, the downside risk is effectively transferred to the state.”
The chamber warned that heavily leveraged projects backed by sovereign guarantees create “material contingent liabilities” capable of destabilising public finances if projects underperform or default.
Independent economist Vince Musewe said Zimbabwe’s weak repayment history severely undermined confidence in government guarantees.
“This sounds great on paper but history shows us that government guarantees hardly reduce the project risk simply because the government has a very bad credit history,” Musewe said.
“How can a government that fails to pay contractors on its current projects guarantee payment in future projects?”
The concerns come as African economies face mounting debt pressures following years of aggressive post-pandemic borrowing, climate shocks, global inflation, rising interest rates and weakening commodity prices.
The continent’s debt crisis has deepened sharply over the past five years, creating a widening divide between economies already in distress and those considered highly vulnerable.
Sudan remains Africa’s most indebted economy, with debt estimated above 250% of GDP amid prolonged conflict, sanctions and economic collapse.