Publications /
Policy Brief

Back
Debt Sustainability and Development Financing in Sub- Saharan Africa: Recent Dynamics
Authors
Lotfi El Jai
September 18, 2019

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

  • April 28, 2022
    Le Policy Center for the New South, le Programme des Nations Unies pour le Développement (PNUD) et la Banque mondiale organisent, conjointement, la 8ème édition des débats « Parlons développement » le jeudi 28 avril 2022 à 13H00 (GMT). Cette nouvelle édition sera organisée en partenaria...
  • Authors
    Sebastian Carranza
    April 28, 2022
    Last March, a proposal of dollarizing Argentina’s economy arrived at its Congress. We summarize here the potential consequences of such a route in case the bill succeeds in getting approval. First, we point out the broad implications of dollarizing an economy. Then, we set out some cases of Latin American experiences with dollarization. Finally, we address the case of Argentina. The main potential benefit of dollarization would be elimination of domestic inflation, but at a very hig ...
  • April 27, 2022
    Le retrait des troupes américaines d’Afghanistan et la reconquête, rapide et sans résistance notable, du pouvoir par les Talibans, a ouvert un nouveau chapitre dans l’histoire particulièrement tumultueuse de ce pays. La mise en oeuvre de la décision américaine a suscité des remous sur le plan interne et des critiques sur le plan extérieur, particulièrement de la part des alliés et des partenaires de Washington. Les engagements pris par les Talibans en vertu de l’Accord signé le 29 f ...
  • Authors
    April 26, 2022
    Which nation is next on Putin’s list, the Baltic states, Poland? “An oligarch is one of the select few people, who rule or influence leaders in an oligarchy- a government in which power is held by a select few individuals or a small class of powerful people” (www.dictionary.com) Now we know. The oligarchs of Moscow and St Petersburg, Vladivostok or Sevastopol, are forced to dig into their reserves, hidden cash, tons of Euro, dollar, pound wherever possible to camouflage their mone ...
  • April 26, 2022
    يخصص مركز السياسات من أجل الجنوب الجديد حلقة برنامجه الأسبوعي "حديث الثلاثاء" لمناقشة التحديات الأمنية بمنطقة وسط إفريقيا مع عبد الحق باسو، باحث بارز بمركز السياسات من أجل الجنوب الجديد. تواجه منطقة وسط إفريقيا العديد من التحديات ذات الطابع الأمني. في مقابل ذلك، تكتسي المنطقة باعتبار ...
  • Authors
    April 26, 2022
    As China’s presence has expanded into the Horn of Africa, Somaliland has opted to distance itself from Beijing and presented itself as a democratic ally of the West – and Taiwan. On March 17, 2022, three Republican Congressmen introduced a bill titled the “Somaliland Partnership Act,” requiring the American Secretary of State to submit annual reports to Congress on assistance provided to Somaliland and conduct a feasibility study on establishing a security partnership with Somalilan ...
  • April 25, 2022
    Retrouvez en exclusivité l’interview de Abdelhak Bassou, Senior Fellow au Policy Center for the New South, qui se livre à Helmut Sorge, Columnist au Policy Center for the New South, au sujet des multi-disparités présentes en Afrique. Abdelhak Bassou est l’auteur du Chapitre 5 du rapport...
  • Authors
    April 22, 2022
    Emerging market and developing economies (EMDE) face a common set of external shocks: rising energy and food prices; tightening in global financial conditions caused by the prospect of sharper interest rate hikes and anticipation of "quantitative tightening"; and return of restrictions on mobility in China, on account of the Covid zero policy, leading to slumping in growth and weakening one of the primary growth drivers for the other EMDE. However, the impacts of those common shocks ...
  • Authors
    Patricia Ahanda
    April 22, 2022
    Le second tour des élections présidentielles françaises qui se tiendra ce 24 avril 2022 opposera de nouveau Emmanuel Macron, le président sortant, et Marine Le Pen, présidente du Rassemblement national. Pourtant, cette nouvelle élection n’est en rien similaire à celle de 2017. Cette élection est un nouvel affrontement politique entre deux leaders aux projets totalement opposés. C’est un duel politique français marqué par des bouleversements sociaux, économiques, générationnels, poli ...