The unabating debt burden of many African countries will negatively impact its growth trajectory, as it tries to recover post-pandemic, Charles Robertson, global chief economist and head of macro-strategy, Renaissance Capital has said.
Robertson said this at the ongoing Africa Business Convention 2022 organized by BusinessDay, noting that this may also affect the continent’s ability to attract Foreign Direct Investment (FDI).
“FDI goes into the richest countries and drops occasionally into developing countries, this is also the same with trade,” he said.
Since the outbreak of the pandemic, the debt burden of African countries has increased significantly.
Read also: Alpha Mead deepens corporate governance, appoints Dele Aloko executive director
According to experts, a major reason for the increase is an amplified appetite for borrowing, with multiple governments insisting the money needs to be put towards improving pandemic response programs and strengthening economic reforms.
Carlos Felipe Jaramillo, World Bank’s vice president for the Latin America and the Caribbean region said in an interview that many African countries have relatively high levels of debt and that means that they do not have enough fiscal resources to respond to the crisis and to help people and SMEs preserve jobs.
Similarly, Peter Quartey, professor at the institute of statistical, social & economic research, University of Ghana said Africa’s development plans are usually drafted without shock absorbers or buffers, which makes the continent vulnerable to shocks.
“Most of the development plans do not prepare for possible shocks and when they happen, it causes a fast retraction in growth even if progress has been made,” he said.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
