ABIDJAN, 22nd April, 2024 (WAM) – Africa’s immense economic potential is being undermined by non-transparent resource-backed loans that complicate debt resolution and compromise countries’ future growth, African Development Bank President Akinwumi Adesina said recently.
“I think it’s time for us to have debt transparency accountability and make sure that this whole thing of these opaque natural resource-backed loans actually ends, because it complicates the debt issue and the debt resolution issue,” Adesina told journalist Yinka Adegoke at the Semafor World Economy Summit taking place on the sidelines of the International Monetary Fund and World Bank 2024 Spring Meetings.
Adesina highlighted the challenges posed by Africa’s ballooning external debt, which reached $824 billion in 2021, with countries dedicating 65% of their GDP to servicing these obligations. He said the continent would pay $74 billion in debt service payments this year alone, a sharp increase from $17 billion in 2010.
While acknowledging the fiscal pressures faced by African nations due to the Covid-19 pandemic, infrastructure needs, and rising inflation, Adesina emphasised the need to address the structural issues in Africa’s debt landscape. He pointed out the shift from concessional financing to more expensive and short-term commercial debt, with Eurobond debt now accounting for 44% of Africa’s total debt, up from 14-17% previously.