Rising interest rates, inflation, and commodity shocks have raised the likelihood of an overlap of debt crises in Africa.
So how can African countries navigate these challenges to increase domestic resources and deepen capital markets while still accessing affordable pools of international private capital?
The International Monetary Fund estimates that 30 percent of emerging markets and 60 percent of low-income countries could face difficulty paying their debts.
Further, there has been a marked change in the global credit landscape over the past decade, with China and private bondholders—who are the main creditors for low-income economies—making the traditional structures less effective for present-day debt challenges.
At the Shareholders General Meeting of infrastructure lender Africa50 early this week in Lome, Togo, African financial and political leaders looked at different ways of enhancing financial and credit access and all agreed that a fundamental shift is required.
The leaders have taken up the push for a re-engineering of the global financial architecture, seeking a model that works for the continent.
Dr. Adesina said the first thing that needs to change is for the global financial architecture to scale up its level of ambition “because we have to attain the sustainable development goals.”
“It is failing the world,” said Dr. Akinwumi Adesina, president of the African Development Bank (AfDB). “It is not able to mobilize the capital that the world needs to meet all of its development needs.”
“It is also failing developing countries because you can see that even after COVID, Africa still needs about $250 billion to recover. We need $277 billion a year to deal with climate change, plus you still have to deal with Africa’s debt. Today, countries have to pay a lot in terms of repayment and service of debt,” he added.
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