…As IMF raises flag on Africa’s rising borrowings

Uche Usim, Abuja

Ten Executive Directors of the World Bank will today in Nigeria hold high-level discussions with the Vice President, Prof. Yemi Osinbajo, the Minister of Finance, Mrs. Kemi Adeosun, and some state governors on various capital and other projects of the bank in the country.

The 10 Executive Directors in the World Bank Mission are from Switzerland, France, Italy, Nordic, Peru, Germany, South Africa (representing Angola, Nigeria and South Africa), Burkina Faso (representing Francophone sub-Saharan Africa), Zimbabwe (representing Anglophone sub-Saharan Africa), United Kingdom and Indonesia.

The delegation, according to the spokesman of the Finance Ministry, Oluyinka Akintunde, will also discuss the country’s development priorities with the Vice President, Minister of Finance and governors.
“The officials will also meet the Nigeria’s Organised Private Sector in Lagos as well as undertake a tour of LAPO Microfinance project in Lagos and Azura Power Plant in Edo State.

“The visit is expected to provide a first-hand impression of the challenges that both the federal and state governments face in implementing development projects as well as ensuring good governance overall.

“It will further enhance the goal of the bank for member-countries and the effectiveness of the Executive Directors in providing necessary support,” he explained.

Meanwhile, Abebe Aemro Selassie, Director of the African Department at the International Monetary Fund (IMF), yesterday highlighted the risk African countries are facing at the moment over their unsustainable debt stock.
Speaking on Tuesday at the unveiling of the African Economic Outlook Report in Accra, Selassie attributed this growing risk to heavy borrowing encouraged by “insatiable investor demand.” The fund projected that the region’s economy will expand 3.4 per cent in 2018 up from 2.8 per cent in 2017, boosted by global growth and higher commodity prices.

IMF said 40 per cent of low-income countries in the region are now in debt distress or at high risk of it and refinancing those debts could soon become costlier.

“The current growth spurt in advanced economies is expected to taper off and the borrowing terms for the region’s frontier markets will likely become less favourable, which could coincide with higher refinancing needs for many countries across the region,” it said.

“African governments issued a record $7.5 billion in sovereign bonds last year, 10 times more than in 2016.

And they have issued or plan to issue over $11 billion in additional debt in the first half of 2018 alone.”
Six countries – Chad, Eritrea, Mozambique, Congo Republic, South Sudan and Zimbabwe – were judged to be in debt distress at the end of last year. And IMF’s ratings for Zambia and Ethiopia were changed from moderate to “high risk of debt distress.”

IMF said Africa would need to be more self-reliant to meet the demand of heavy investments to build infrastructure and social development.

“With debt vulnerabilities rising in the region, sub-Saharan African countries will need to further rely on sustainable sources of financing, making domestic revenue mobilisation one of the most urgent policy challenges for the region.”