Adesina warns African nations that era of free money’s over

Akinwumi Adesina, President of the African Development Bank (AfDB), has expressed concerns over Africa’s escalating debt, particularly highlighting the challenges posed by non-transparent resource-backed loans.

These loans, often secured against the continent’s rich natural resources like oil and minerals, have led to financial exploitation and unsustainable debt levels.

Adesina emphasized that such arrangements complicate debt resolution and hinder future economic growth.

Africa’s external debt reached $824 billion, with countries dedicating approximately 65% of their Gross Domestic Product (GDP) to servicing these obligations. The AfDB projects that in 2024, the continent will spend $74 billion on debt servicing, a significant increase from $17 billion in 2010.

This surge underscores the urgency for transparent and sustainable financing solutions.

Adesina called for an end to opaque natural resource-backed loans, advocating for debt transparency and accountability to simplify debt resolution processes.

He also noted the shift from concessional financing to more expensive commercial debts, with Eurobond debt now constituting 44% of Africa’s total debt, up from 14-17% previously.

Additionally, he criticized the “Africa premium” that African nations face when accessing capital markets, despite having lower default rates compared to other regions.

Highlighting Africa’s vast economic potential, Adesina pointed out the continent’s $6.5 trillion worth of natural resources, 65% of the world’s uncultivated arable land, and a vibrant youth population.

He stressed that these assets should propel Africa towards self-sustained development, reducing reliance on aid and focusing on concessional financing to drive growth.

In summary, Adesina’s remarks serve as a cautionary note for African nations to reassess their debt strategies, prioritize transparency, and leverage their abundant resources effectively to secure a prosperous economic future.

SOURCE: kingfresh