Editor’s Note: March 20, 2019

Does Africa really need more Eurobonds?

Ghana sold a $3bn Eurobond on Tuesday, with plans to use the money to fund infrastructure development and clear existing, maturing debt.

It’s the latest addition to Africa’s seemingly insatiable appetite for Eurobonds. It comes as Benin readies its first ever sale, and  less than a week after Côte d’Ivoire issued $2.1bn in euro-denominated debt.

It also comes after a second consecutive record year for Eurobond issuances by African sovereigns. More than $25bn worth was sold in 2018, up from $18bn the previous year.

Debt has slipped out of the headlines lately, but Africa’s borrowing problem hasn’t gone away. The continent is now sitting on an estimated $92bn of outstanding sovereign Eurobonds, around $35bn of which will mature between 2021 – 2025.

Already high yields have jumped due to interest rate hikes in the US, adding to increasingly unsustainable debt levels. Ghana spends more than a third of government revenue on debt-servicing. Nigeria’s interest payments-to-revenue ratio more than doubled to 60% last year, and could hit 82% by 2022.

Much of this debt is being put to questionable use, including paying off existing loans and funding budget deficits.

Despite numerous warnings about debt sustainability, the Eurobond binge looks set to continue. Good news for investors chasing high yields, but it could end badly for borrowers.

From The Continent

Nigeria’s senate has approved a proposal to raise the country’s minimum wage by 67% to $83 per month, in a bid to alleviate rampant poverty in Africa’s biggest economy. Last year Nigeria overtook India as the country with the most people living in extreme poverty globally, despite having just 14% of its population. More: Bloomberg


Zimbabwe is hoping to raise $350m from the privatization of five state-owned telecommunications companies and a bank, part of efforts to tackle the country’s worst economic crisis in a decade. The move comes amid waning confidence in government pledges reverse years of stagnation under Robert Mugabe. More: CGTN

The Daily Stat

17

The number of African countries that have participated in the first major joint-military exercise with India this week. More: The Diplomat

The Global Perspective

Japan’s Nissan and state-owned Egyptian El Nasr Automotive Manufacturing have reached an initial agreement to produce 100,000 cars annually in the country. This comes amid an investment drive on the continent by major car makers. More: Reuters

The IMF will visit Tunisia on March 27 for a fifth review of the country’s $2.8bn loan programme. This comes two months after the government raised the wages of 670,000 public sector workers, against the IMF’s advice, following widespread opposition to austerity measures. More: Reuters

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