A respected professor and top United Nations advocate is rooting for a review of terms of loans trickling to Africa, terming the recent arrangements “…dangerous for long-term development.”
The UN Secretary-General António Guterres’ Advocate for Sustainable Development Goals, Prof Jeffrey Sachs, noted that long-term affordable financing must be part of Africa’s strategy to achieve growth of 7 per cent or more per year and warned that Africa is paying a very high-risk premium for debt financing.
“Long-term development cannot be based on short-term loans. Loans to Africa should be at least 25 years or longer. Short-term borrowing is dangerous for long-term development. Africa must act as one, in scale,” he explained during the release of African Development Bank Group Latest Macroeconomic Performance and Outlook (MEO) of the continent.
Africa’s Growth Spurt
Overall, real gross domestic product (GDP) growth for the continent is expected to average 3.8 per cent and 4.2 per cent in 2024 and 2025, respectively.
- This is higher than projected global averages of 2.9 per cent and 3.2 per cent, the report said.
- The continent is set to remain the second-fastest-growing region after Asia.
- The top 11 African countries projected to experience strong economic performance forecast are Niger (11.2 per cent), Senegal (8.2 per cent), Libya (7.9 per cent), Rwanda (7.2 per cent), Cote d’Ivoire (6.8 per cent), Ethiopia (6.7 per cent), Benin (6.4 per cent), Djibouti (6.2 per cent), Tanzania (6.1 per cent), Togo (6 per cent), and Uganda at 6 per cent.
East Africa will continue to lead Africa’s growth momentum, with growth projected to rise to 5.1% in 2024 and 5.7% in 2025, supported by strong strategic investments to improve internal connectivity and deepen intra-regional trade.
The 2024 MEO says in the short term, tackling persistent inflation will need a mix of restraining monetary policy coupled with fiscal consolidation and stable exchange rates.
The report identifies structural reforms and strategic industrial policies as key to accelerating economic diversification and strengthening the export sector.
It recommends that countries invest more in human capital and pursue a resource-based industrialisation and diversification strategy that allows the continent to exploit its comparative advantage and build resilience to shocks.
Sachs, who is also the Director of the Center for Sustainable Development, Columbia University also called for a much larger African Development Bank, better resourced to meet Africa’s financing needs.
