Looming debt crisis? We look at government borrowingApril 14, 2021 2125 views 2 comments 2 minutes reading time
Does Africa have a looming debt crisis? This question elicits different responses from various players in the economy.
Statistics currently show that at least 30 African countries have exceeded the 50% debt-to-GDP ratio. This means that they might be highly susceptible to economic fluctuations. An increase in domestic borrowing has seen a significant spread of the continent’s debt, despite external borrowing contributing to the largest share of Africa’s debt.
African countries’ move to borrow from non-traditional lenders like China has raised eyebrows among the old players like the IMF, Paris Club and the World Bank. These traditional lenders feel like China is luring Africa into a debt-trap due to its non-concern on good governance and accountability.
We asked Carl Manlan, Chief Operating Officer of the Ecobank Foundation, his opinion on Africa’s borrowing. He puts into perspective the impact of borrowing and the value of debt in African economies.
Dr Mukhisa Kituyi, the former Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) shares his sentiments on countries that use debt for recurrent expenditure.
Dr Vera Songwe, Executive Secretary of the Economic Commission for Africa, is of the opinion that sometimes the important aspects of borrowing are overlooked in the continent.
Economists argue that Africa needs to expand its revenue collection and implement proper management of public resources as an alternative to borrowing.
Is your government borrowing too much? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts!
Image by DFID -UK Department for International Development via flickr