Editor’s Note: March 25, 2019

Africa needs to get smarter about debt

Côte d’Ivoire has cancelled plans to issue Eurobonds in 2019. Explaining the decision prime minister Amadou Gon Coulibaly cited “market conditions”, a likely reference to rising interest rates in developed markets, which are pushing up already high yields on African sovereign debt.

To keep down borrowing costs the country instead plans to raise $2.5bn from the regional market and through direct loans from international banks.

It’s a prudent move.

African governments have binged on international bond markets in recent years, ratcheting up an estimated $92bn in outstanding sovereign Eurobonds – around $35bn of which will mature between 2021 – 2025. Last year’s total alone came to more than $25bn.

This has fueled the continent’s mounting debt problem. Public external debt more than doubled from 2006 – 2017 to $707, up to 70% of which is denominated in foreign currencies. Sixteen countries on the continent are now classed as being at moderate or high risk of debt distress by the IMF, up from five in 2014.

Despite this governments keep issuing ever more expensive Eurobonds, seemingly ignoring the associated risks, as well as alternatives like local currency bonds or regional markets.

Côte d’Ivoire’s decision is an illustration of a country trying to be smarter about its debt. It’s an example others may want to follow.

From The Continent

Angola has said its sovereign wealth fund has recovered $3.35bn in assets previously under management by Quantum Global Investment Management, part of a high profile investigation into alleged fraud at the fund. This is part of an anti-corruption and economic reform drive under president João Lourenço. More: Bloomberg

Nigeria’s national oil company plans to revamp the country’s decrepit oil refineries in a bid to save billions in fuel imports, and has reportedly hired Italy’s Maire Tecnimont to work on the project. Nigeria is notorious for suffering from fuel scarcity and high import bills, despite being Africa’s biggest oil producer. More: Africanews

The Daily Stat

$614bn - $638bn

Africa’s estimated annual financing needs to meet the UN’s Sustainable Development Goals by 2030. More: UNECA

The Global Perspective

Tanzania hopes to complete talks in September with a group of oil companies led by Norway’s Equinor on developing a liquefied natural gas project in the country, following years of regulatory delays. The country is estimated to have recoverable reserves of around 57tr cubic feet. More: Reuters

Ethiopia is reportedly in talks with China to renegotiate billions in loans for a major railway linking it with neighbouring Djibouti to avoid debt problems related to the project. The railway is part of Beijing’s Belt and Road trade initiative, which is facing accusations of being a ‘debt trap’ for developing countries. MoreSouth China Morning Post

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