AfDB president, Dr Akinwumi Adesina revealed the current state of debt in Africa during the launch of the Economic Outlook for 2020 publication and was quoted as saying that the median debt to GDP ratio had risen from 38 per cent in 2008 to 54 per cent in 2018.
He said, “We must tackle rising debt levels. Total debt stock (external and domestic) currently stands at $500bn.”
He however noted that there was no need for the panic button as Africa did not yet have a systemic debt crisis.
“However, we must watch the quality of debt, the mix of debt in terms of concessional and non-concessional,” implored the AfDB President.
He also called on Africa’s leaders to examine the potential negative effects of rising domestic debt in crowding out private sector access to finance.
He also drew caution against the increasing level of non-Paris Club bilateral debts and the and rising volumes of Euro bonds.
He further noted that, “While there is no cause for alarm, greater prudence is needed. We all must now collectively focus on sustainable debt management and greater reliance on domestic resource mobilisation to finance rising fiscal deficits”.
Adesina said infrastructure remained a challenge for many countries and a bulk of the debt was used to address this issue.
He stated that governments could improve the cost effectiveness of their expenditures on infrastructure by focusing on quality infrastructure and improving efficiency of public expenditure on infrastructure.
He further noted that more benefits would be realised if governments also started focusing on promoting greater participation of private sector in the provision of infrastructure.
The African Economic Outlook, published annually since 2003, provides compelling up-to-date evidence and analytics to inform and support African decision makers.
This years economic outlook projected that the continent’s economic growth remained stable in 2019 at 3.4 per cent and was on course to pick up to 3.9 per cent in 2020 and 4.1 per cent in 2021.