- Launches Initiative to Tackle Africa’s Debt Challenges
By Tolúlopé Olátúnjí
In a quest to tackle Africa’s debt challenges with locally developed solutions, the African Development Bank (AfDB), through its African Development Institute, has inaugurated the African Debt Managers Initiative Network (ADMIN). This pioneering program was launched amid concerns that 13 out of 38 African countries are at high risk of debt distress.
The launch event and the first peer learning session were held in Addis Ababa, focusing on the theme: “Developing and Deepening Domestic Debt Markets in Africa.”
The Director of the Governance and Economic Reforms department, AfDB, Coulibaly Abdoulaye, who revealed this noted that ADMIN is designed to provide bespoke, indigenous solutions to the continent’s pressing debt crisis
Abdoulaye highlighted that the network will bolster the debt management capabilities of African officials and institutions, enabling them to swiftly address debt challenges, restore macroeconomic stability, support inclusive growth as well as facilitate the exchange of expertise among debt managers in the region.
In his address, the Director of the African Development Institute, Eric Ogunleye noted that increasing borrowing by African countries to meet infrastructure needs, reduce poverty, combat climate change, and address security concerns, is worrisome because that move in turn escalates debt vulnerability.
Ogunleye pointed out that rising debt vulnerability and weak debt management have exacerbated macroeconomic instability and impaired effective policy responses, leading to increased debt distress in several countries.
“There is, therefore, a growing need to strengthen debt management capacity in African countries,” Ogunleye stated. He revealed that, as of April 30, 2024, 13 out of 38 African countries with available debt sustainability data are at high risk of debt distress, while six are already experiencing it.
He also highlighted that a significant portion of African debt is now owed to external bondholders and non-Paris Club creditors, resulting in high-cost debt that consumes an average of 18% of total government revenue.
Discussions at the meeting underscored the importance of developing an African domestic debt market as a means to secure cheaper and more stable sources of debt financing for the continent’s diverse development needs.
Key topics included sound debt management frameworks, networking, and peer learning to foster the development and deepening of domestic debt markets in Africa, thereby promoting long-term debt sustainability.
