The President of the African Development Bank, Mr. Akinwumi Adesina, has said that non-transparent resource-backed loans that tend to complicate debt resolution are undermining African economic potential.
While speaking at the Semafor Africa Summit, Mr Adesina said, “I think it is time for us to have debt transparency accountability and make sure that this whole thing of these opaque natural resource-backed loans ends because it complicates the debt issue and the debt resolution issue.”
Mr Adesina drew attention to Africa’s growing debt which reached an astounding $824bn in 2021, with the concerned parties committing 65 percent of their GDP to clearing off these obligations. He insisted that the continent’s debt service payments would grow to $74 billion this year alone, a significant increase from the $17 billion it witnessed in 2010.
While citing the COVID-19 pandemic, infrastructure demands, and rising inflation across African countries as sources of fiscal strain, Adesina emphasized the need to address structural challenges in the debt landscape of the continent urgently.
Furthermore, Mr. Adesina disagreed with the imposition of a “prize for Africa” on nations seeking access to capital markets, even if data suggests that default rates in Africa are lower than in other areas. He called for a re-evaluation of risk to alleviate the high borrowing costs that African countries must pay.
The head of the AFDB also pushed for the quick adoption of the G20 Common Framework and a systematic approach to debt management in Africa. He pointed out that the amount of concessional finance has decreased and that vulnerable nations can now obtain long-term, low-interest financing from the African Development Fund. Akinwumi talked about the bank’s de-risking initiatives and expressed hope for Africa’s potential in renewable energy.
Echoing Africa’s appeal to investors and the African Development Bank’s dedication to fostering an environment that is conducive to investment, he reaffirmed the Africa Investment Forum’s role in promoting large-scale investments across critical industries.
