Due to weak payment cultures and sluggish legal systems, collecting unpaid debts is still a risky and frequently tedious endeavor for lenders and businesses throughout much of Africa.
Africa and the Middle East rank among the world’s most challenging regions for debt recovery, according to new findings from Allianz Trade’s Collection Complexity Score and Rating. The results indicate enduring structural issues, such as inefficient bankruptcy rules, lengthy Days Sales Outstanding (DSO), poor payment discipline, and postponed court hearings.
In transactions involving major firms and public-sector institutions, where settlement delays have become commonplace in many marketplaces, late payments are particularly prevalent. Slow, complicated, or hard-to-enforce legal processes further exacerbate these difficulties, giving creditors few choices for recovery.
In light of this, some African nations stand out as exceptionally difficult places to recover debt. The following markets are among the hardest for creditors on the continent based on payment patterns, the effectiveness of the judicial system, and the intricacy of bankruptcy procedures.
South Africa
Most people agree that South Africa’s debt collection industry is the most complicated in Africa. Regular terms of payment often reach 90 days, which is significantly longer than international standards. Recovery is unclear and time-consuming due to extensive court backlogs, administrative delays, and drawn-out liquidation proceedings under the Master of the High Court. Legal action is discouraged because insolvency proceedings rarely result in substantial returns for unsecured creditors.
Egypt
In an effort to improve payment processes, Egypt has tightened rules and strengthened banking control; yet, late payments are still common in both the public and commercial sectors. For uncontested debts, creditors can employ organized legal procedures like the Order for Payment, while the Economic Courts handle disputed claims, which frequently necessitate multiple hearings. Since unsecured creditors usually receive little in liquidation situations, recovery primarily hinges on the capacity to track down debtor assets.
Morocco
Morocco still has poor payment practices, with typical delays of 90 to 120 days. Its complicated legal system is frequently criticized for its lack of openness and slowness. Although there are a number of insolvency procedures, they are usually inefficient and slow, and it can be very challenging to enforce court decisions, making debt recovery through legal channels unappealing.
Senegal
Payment discipline is frequently lacking in Senegal, especially when it comes to business-to-business transactions. Actual payments frequently take more than 60 days, even if official DSOs typically take 30 days, particularly when large corporations and public administrations are involved. Enforcement is made more difficult by the lack of centralization of debt recovery data compared to Europe. The OHADA treaty’s civil law frameworks, which provide regional consistency but do not completely remove practice delays, govern the nation.
