Friday, 27th May 2022
Breaking News:

Eyes on Africa’s rising debts

By Matthew Agboma Ozah
07 July 2021   |   3:05 am
Of late, African leaders spotted a defining moment and seized the opportunity to recklessly borrow money with certain confidence guided by propaganda that a bright and prosperous future beckons for the continent

FILE: Chinese PresidentXi Jinping(R) holds talks with Nigerian President Muhammadu Buhari in Beijing, capital of China on April 12, 2016. (Xinhua/Rao Aimin)<br />

Of late, African leaders spotted a defining moment and seized the opportunity to recklessly borrow money with certain confidence guided by propaganda that a bright and prosperous future beckons for the continent. But, one wonders if there is any economic wisdom for anyone to continue borrowing to service recurrent debt without efforts to grow the economy. That brings to bear the question: why do African leaders choose to make the living conditions of their people so cross? The more one thinks about it, the odder it becomes.

There is nothing as frustrating as living in abject poverty amid riches. Considering the fact that Africa has come of age, therefore, it has reached a point where borrowing by its leaders as antidote to economic management must give way to a progressive development and management of the continents rich resources. One of the good things about Africa is that it is blessed with human and natural resources. But, in one breathless step for the African people to harness the spoils of their God-given natural gift through political leadership saw the continent being led by mediocres. Of course, the conflation of poor leadership among African leaders has generated nothing but decades of poverty, unemployment, conflicts and endless mysteries of financial mismanagement from Morocco to South Africa, and from Nigeria to Kenya. 

As much as African leaders have cared, hunger and miserable living condition has become a companion to the masses irrespective of the natural blessings of the continent. There is no guarantee for portable water for all, healthcare for all, education for all, shelter for all, among others. Thus, there would be absolutely no need to worry about a brighter future, as it has been mortgaged with insurmountable debts. For all the adjectives you could use to describe debt, being a debtor is confounding, frustrating and above all, desperately boring. As it were, there is nothing particularly that brings a joyful memory or an exhilarating prospect to the African people from its leaders. Hence, the other day, at the African Development Bank Group’s 2021 annual meeting, the Director-General of World Trade Organisation (WTO) and ex-minister of Finance, Ngozi Okonjo-Iweala, President of the African Development Bank (AfDB), Akinwunmi Adesina, Governor of the Central Bank of Egypt (CBE) Tarek Amer and other regional stakeholders in a tribe of thought against borrowing gave a warm advice and warning about wide ranging reasons African leaders should beware of debt distress.

The speech was as rousing and a timely warning any speech could be in these debt burden panorama times. As rightly observed by Okonjo-Iweala, the debt burden pre-dated COVID-19 but worsened during the pandemic. Therefore, she warned, “prevention is better than crisis management because Africa could not afford to fall into debt trap again”. The facts and figures on parade are unbelievably true as it alarmingly disturbs the ordinary citizens more than the political class that are the architect of misery. In the case of Nigeria, and according to the data released by the Debt Management Office (DMO) reveals that N612.71 billion was spent on domestic debt service, while N410.1 billion was expended on servicing external debt.

The issue of Africa’s debt burden remains a recurrent headache because the problem is getting worse by the day. There is no benefit in manipulating the true nature of the continents economy like politicians do, hence, the DG, WTO described Africa as an embodiment of the global trickery growth as the continent lags behind while advance economies and China are growing at a faster rate. Given the fact that, the last five years and certainly the last one year, the COVID-19 pandemic era has been very hectic for the continent. There is little or no fundamental initiative to grow the economy other than seek for financial bailout, some of which are with conditions best described as selling out the country to the money lenders. It is indeed sad, that the continent has in recent times been pleasantly plagued with leaders who chose to embrace handouts from the International monetary bodies or rich nations.

Aside Africa’s leaders collective weakness to roll up their sleeves and till the soil, the artificial divisions and boundaries created by the colonial masters who remotely through economic and military operations simply overt or covert allows the continent to remain static in economic growth and infrastructural development. This is why trade among African countries remains very poor and sluggish. It also explains why some certain countries in Africa may be starving, yet foodstuff and raw materials is being exported from another country abroad. The question today is whether Africa can survive in its continued borrowing and shipping away its natural raw resources in exchange for peanuts; compared to the revenue generated after processing the raw materials. It is important that African leaders and government should not only trade among themselves but endeavour to invest more on research to bring about processing their raw materials to finish products. In this regard, it is saddening that, African countries economy that is largely agrarian spends far less than half of what the industrial countries spend on research. To make a bad story worse, African leaders over-reliance on development research from outside the continent; majority of these research document are not necessarily relevant to the individual or collective needs of African countries.

The way things are drifting, the time has come to go beyond the rhetoric of conferences, seminars and propaganda of various African leaders that poverty and unemployment in the continent particularly their individual countries are sustained by monies they borrow from developed countries, International Monetary Fund (IMF) and World Bank. It is obvious that even if the African economy grows at higher percentage, the continent cannot make any meaningful progress especially in competing with the rest of the world if it continues to borrow to finance its annual budgets. The warning from the DG, WTO and others is particularly notable to the extent that sustaining Africa’s economy should not rest on loans alone. It is high time African leaders should demonstrate a sense of sincerity that necessitate good governance through better management of the continents wealth for the good of all. This would help to create a new reputation and at least, keep the lights on.