AFRICAN Development Bank (AfDB) has advised African states to avoid plunging into debt in a quest to meet fiscal obligations currently affected by low revenue on the back of falling commodity prices.
AfDB president Akinwuni Adesina said a number of countries in Africa have in the past few years issued sovereign bonds amounting to US$26 billion, posing a challenge of high cost of financing the foreign currency dominated debt.
Zambia issued three eurobonds on the international market at US$700 million, US$1billion and US$1.25 billion.
“Africa must not get into debt crisis. Increasingly, many African countries, taking advantage of the low global interest rates, rushed to the international capital markets by issuing bonds…With rising interest rates, African countries now face a challenge of high cost of financing debt,” he said.
Speaking at the official opening of the AfDB annual general meetings being held here under the theme , ‘Energy and climate change’ Dr Adesina said there is need for urgent measures to ensure macroeconomic stabilisation, fiscal consolidation, broadening of the tax base and deepening of the capital markets.
Dr Adesina said African countries should mobilise domestic resources for development.
He said the continent has several financing sources that can effectively contribute to economic transformation of many countries.
“[States] should leverage sovereign wealth funds which stand at US$162 billion, domestic tax revenue estimated at US$500 billion annually, private equity fund which stand at US$20 billion per year, and pension funds estimated at US$334billion,” he said.
He also said Africa needs to combat illicit capital flows estimated to be over US$60 billion annually and prevent the continent from achieving its growth targets.
Meanwhile, Dr Adesina has emphasised that Africa remains resilient despite economic challenges being experienced by some countries.
“Africa is not falling apart. The Africa rising story remains strong,” he said.
Excellent advice but for us its way too late!! Wish u had given it four years ago!
question is would they have listened?Cry my beloved country.
Another GREAT achievement by PF. Zambian “contribution” to total African bond issue stands at “manageable” (LOL) 11.54%!!!
We warned PF that it is not possible to borrow our way out of poverty, but did they learn. Now the country has to look to the IMF for a package which non of them will fully understand till it is operational in the country. Shame on PF and its supporters.
VIVA HH 2016
It is now a given that we are indeed into another debt trap in the making just slightly over a decade when we were forgiven the unsustainable debt that we owed IMF by some donor countries after enduring so much pain in form of severe austerity measures. Some of us even called the days of the 90s a second liberation struggle for our country. All the people who lost jobs and their livelihoods are likened to liberation heroes. We thought that was the end of such economic mismanagement never to be repeated. We even thought the end of socialism that we followed so dearly has taken us down with it. Alas, before we know it, we are re-inviting IMF to come and bail us out because we have mismanaged again!!! Poor voters, they do not know what comes after August 11. The one crucial question I have…
This election, for me, is far far away from which tribe the winning candidate is from, or whether he knows how to dance and so on, the fundamental issue is what do we do with a regime that has taken us back into the very shackles of debt that we had so enviously worked ourselves out of? IMF is waiting to formalise the debt-relief package with it’s associated conditions with the PF govt, whilst on the other hand, UPND is hoping to renegotiate the proposed bail out package. That is why, among other reasons, my vote goes to UPND.