Is the African Continent really able to do without loans from developed Nations?
Well, in as much as these loans have helped spur development in many parts of Africa, some African states have become hostages to the developed Nations who now control vital parts of their economy and governments.
With this in mind, African Union High Representative for Infrastructure and Development Raila Odinga yesterday called for enhanced business among African countries, which he cautioned against reckless external borrowing.
His sentiments come amid growing pressure for African countries to tame appetite for loans to fund infrastructure projects.
Africa’s Eurobond debt has passed the Sh10 trillion mark after Ghana issued a Sh270 billion bond on March 26. Last year, the continent issued Sh2.7 trillion in agreements, according to analysts at Renaissance Capital (RenCap).
This year, Egypt, Ghana and Benin have already issued Sh760 billion Eurobonds with more expected from South Africa, Kenya, Angola, Egypt and Nigeria.
RenCap estimates the total bonds amount in the region will be Sh1.8 trillion this year, triggering concerns given that in 2010, only 10 African countries had issued Eurobonds. It is against this background that Raila wants African countries to look inward for loans to avoid predatory lending.
“We need to identify more local sources for infrastructure financing. We need to approach global financing institutions and lending nations as a continent and not as individual countries,” he advised yesterday during an AU infrastructure meeting in Nairobi.
Raila acknowledged the need for infrastructure development in Africa. “The difference between what we have and what we need is at around Sh17 trillion,” he said.
From 2012 to 2017, Chinese lending to Sub-Saharan African countries swelled to more than Sh1 trillion yearly, up from less than Sh100 billion in 2000.
Over the last two decades, China has pledged billions of dollars to countries in loans, grants, and development financing. Through its Belt and Road initiative, AU agreements and at the forum on China-Africa cooperation, the Chinese extended their “win-win” economic policy by investing in railway, highway and port projects besides industrialisation.