According to the chief economist for Africa at the World Bank, the future of Africa’s capacity to sustain its debt is still “cloudy” because of the challenges posed by poor growth and high inflation to the stability of many of the continent’s economies.
A sort of stagflation gaining root, according to Andrew Dabalen, is one of the main worries. According to the bank, growth will reach 3.1% in 2023, despite double-digit inflation in several regions of the continent.
The World Bank reports that over half of the nations in Sub-Saharan Africa are either in serious debt trouble or are very likely to experience it soon.
“We don’t expect the number to grow beyond what we have now,” Dabalen said in an interview with the American news agency Reuters, although he cautioned that changing global economic conditions continued to present risks to that outlook.
Ghana became the second country to default on its debt in late 2017, joining Zambia. While Ethiopia’s talks were hampered by civil war, Chad’s negotiations with its creditors via the G20’s Common Framework procedure ended in November without a debt reduction.
Dabalen stated that the discussions for Zambia’s Common Framework debt restructuring “keep dragging on” and that the procedure had to be fair to all creditors.
He said that many nations are making the required preparations to put changes into place that would better serve their long-term goals and that internal reforms would always be preferable to those that were imposed on them by foreign donors.
According to Dabalen, a sizable proportion of the continent’s nations are in the exceptional situation of possessing the natural resources essential for the transition to a low-carbon future.
“A lot of the minerals in demand come from mostly African countries. … so they can really try and maximize revenues to build different kinds of economies that are industrialized,” he said.
