Publications /
Policy Brief

Back
Download PDF
Debt Sustainability and Development Financing in Sub- Saharan Africa: Recent Dynamics
Authors
Badr Mandri
Lotfi El Jai
September 18, 2019
Related topics: 

Countries in Sub-Saharan Africa (SSA) currently face a yearly infrastructure financing gap ranging between $68-$108 billion along with other socio-economic challenges (AfDB, 2019). Debt financing remains a major source of growth as countries in the region work to achieve their developmental needs and the Sustainable Development Goals (SDGs). The levels of official development aid (ODA) and foreign direct investments (FDIs) remain volatile to fully meet the region financial needs. However, the sustainability of SSA external debt raises serious concerns if one looks at the rapid debt accumulation in recent years. This brief will highlight the recent changes in the nature and quality of debt in SSA along with details of the risks related to the shift in the creditors base. Finally, this brief aims to demonstrate the impact of these risks on debt sustainability and the future of development financing in SSA.

In the early part of the 21st century, debt sustainability challenged Sub-Saharan Africa (SSA) as it sought to reach the Millennium Development Goals (MDGs). Following two episodes of debt relief (HIPC and MDRI2), the average debt-to-GDP ratio has decreased from over 100% in 2000 to less than 40% in 2010 (figure 1), representing a debt stock reduction of almost $100 billion (IMF, 2017). This was a breath of fresh air that would have allowed SSA countries to sustain their current and future debt levels and promote development expenditures in the region.

However, with the stagnation in the level of official development aid following the Global Financial Crisis of 2007, and the difficulties of the region’s countries in mobilizing domestic resources to finance their infrastructure and socio-economic development needs

RELATED CONTENT

  • Download PDF
    MERCOSUR experience in regional integration: what could Africa learn from it?
    Authors
    Pedro da Motta Veiga
    Sandra Polónia Rios
    June 25, 2019
    MERCOSUR is almost thirty years old. The project has achieved relevant accomplishments, but it has also accumulated many unfulfilled objectives and even some setbacks. It began with a very ambitious goal: the constitution of a common market. This ambition was quickly reduced to a customs union project, still a far-reaching objective. Africa, by its side, has undergone, since many decades, relevant regional and sub-regional integration experiences, some of which share the ambitions o ...
  • Download PDF
    China’s FDI in Brazil: recent trends and policy debate
    Authors
    Pedro da Motta Veiga
    Sandra Polónia Rios
    June 25, 2019
    From 2010 onwards, China has become a relevant foreign investor in Brazil, mainly through State-owned companies investing in infrastructure – particularly in the energy sector. In the first years of the current decade, Chinese investment has been widely welcomed in an environment characterized by declining investment rates and low economic growth. However, more recently, some concerns have been raised of an “excessive” dependence of China state companies in sectors perceived as stra ...
  • Morocco and Brazil: Perspectives for a Strengthened Relationship
    Authors
    Pedro da Motta Veiga
    Sandra Polónia Rios
    June 24, 2019
    The cooperation between Brazil and Morocco dates back to the 19th century, when Moroccan migrants came to Brazil attracted by the then booming exploration of rubber in the Amazon rainforest. In 1861, the Brazilian government opened its first consulate in Tangier.  But it was only since 1961, with the Moroccan independence, that the bilateral relations began to diversify. At the political sphere, there has been a fluid dialogue, driven by convergent views on several issues related t ...
  • Explaining the role of commodity traders: A theoretical approach
    Authors
    Raphaël Chiappini
    Yves Jégourel
    June 22, 2019
    Empirical models of international commodity trade ows tend to show that exchange rate volatility has either no or negative impact on export volumes. This analysis has a number of limitations. In particular, it underestimates the role of physical traders and, consequently, the importance of future markets. In this context, this article aims to provide the theoretical underpinnings to demonstrate that these traders play a very particular role and that they have an influence on the rea ...
  • Partager Sanctions: America's Chokehold
    Authors
    Helmut Sorge
    June 21, 2019
    The New York Times reported this morning that after the shot down of an U.S. drone by Iranian forces, President Trump ordered military retaliation, but called it off in the early phase. Below is a facts' review through the international press perspectives. “You are pushing everyone towards a confrontation” Unusually, the satellite images were not presented to the media. Possibly, the photos were taken from a submarine, or there was fear that the enemy could figure out who and how ...