Is debt the key to sustainable development in Africa?

In 2020, David MALPASS, President of the World Bank (WB), criticized the African Development Bank (AfDB) for granting loans to certain African countries in an ill-considered manner. In response, the AfDB issued a statement: "... our Bank recognizes and closely follows the upward trend in debt. However, there is no systematic risk of over-indebtedness".

According to the WB's April 2023 report, sub-Saharan Africa's debt in December 2022 was estimated at 1140 billion USD, representing a median weighting of 57% of GDP. By way of comparison, at the same date, global debt stood at 300 billion USD. Africa therefore represents only 0.4% of the global debt stock, which is very marginal.

However, according to the AfDB's " African Economic Outlook 2024 ", Africa needs to structurally transform itself by financing strategic investments. The financing gap for these investments (education, energy, technology, transport infrastructure, etc.) is around 402 billion USD/year until 2030. According to the IMF, " Africa needs USD 2,800 billion between 2020 and 2030 to adapt to global warming and reduce its greenhouse gas emissions; the resources committed to date are insufficient, only USD 300 billion ". According to Christian YOKA, Africa Director of Agence Française de Développement (AFD), at least 250 billion USD/year, or 10% of the continent's GDP, is needed to close the gap.

To achieve this, Africa needs to grow faster than the rest of the world, between 7 and 10% a year, and meet the aspirations of its very young population, against a backdrop of declining international financing and rising borrowing costs, with the particularity that rising interest rates worldwide affect Africa the most. Trade and transport infrastructures need to be improved, as do productive investments, as Asia did in the 1990s.

It is necessary to increase Africa's external financial flows while at the same time strengthening domestic resources. In particular, it is crucial to raise the ratio of own resources to GDP to over 27% in order to effectively combat poverty. Expanding the tax base must go hand in hand with good governance, notably by reducing the expensive and lavish lifestyle of sub-Saharan African states.

Debt is also desirable, but only in the form of concessional-rate debt. This debt should finance development infrastructures and productive investments, which should be analyzed and structured by financial specialists rather than mere civil servants.




Hubert OTELE ESSOMBA was born on September 14, 1968 in Yaoundé, the capital of Cameroon. His early interest in numbers led him to the Lycée Technique de Douala (the only establishment of its kind at the time), where he obtained a Baccalauréat G2, Techniques Quantitatives de Gestion, before flying to France to continue his studies at IAE-Université Jean Moulin-Lyon III. There he obtained the Diplôme d'Etudes Comptables et Financières, before later taking the Global Executive MBA Finance (IHFI) at IFG Executive Education and a Master 2 in Financial Management at Paris Panthéon I Sorbonne.

He was in turn Managing Director of Central Africa for the British aeronautical firm Aircraft Portfolio Management, Managing Director of AKENO S.A., a company specializing in LPG gas distribution in Cameroon, and Associate Director of the financial consultancy firm G&M Finance (financial investigation, financial diagnosis, in-depth financial analysis, investment advice and fund-raising on international financial markets...).

He is the author of numerous publications specializing in finance in Cameroon ("The financial system, a major player in the fight against Covid-19"; "Debt relief and the urgent need to reallocate public resources"; "The return of Keynesianism and state indebtedness"; "Economic sanctions against Russia: Africa could be a collateral beneficiary", etc.).

He is also the author of the book "les ailes brisées de l'Albatros", published by l'Harmattan in March 2023.

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