Public Debt and Exchange Rate Volatility in Africa: Implications for Trade and Investment

Khadijah Iddrisu (), Simplice Asongu and Richard Cromwell
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Khadijah Iddrisu: Accra, Ghana
Richard Cromwell: Cape Coast, Ghana

No 26/057, Working Papers of the African Governance and Development Institute. from African Governance and Development Institute.

Abstract: This chapter explore the link between public debt and exchange rate volatility in Africa, showing how each reinforces the other and impacts trade, investment, and financial stability. It traced historical debt trends and recent post-COVID challenges, noting rising debt distress. Exchange rate patterns vary, with commodity exporters facing volatility, the CFA zone enjoying stability with trade-offs, and flexible regimes struggling with shocks. The chapter revealed how this debt–currency nexus affects competitiveness, integration, and capital flows. The chapter calls for prudent debt management, deeper financial markets, regional coordination, and risk-mitigation tools to enhance resilience and support sustainable economic development across Africa.

Pages: 17 pages
Date: 2026-01
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http://www.afridev.org/RePEc/agd/agd-wpaper/57.Pub ... e-and-Investment.pdf Revised version, 2026 (application/pdf)

Related works:
Working Paper: Public Debt and Exchange Rate Volatility in Africa: Implications for Trade and Investment (2026)
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