ADB Says $824 Billion Dollars Loans Slowing Africa’s Growth.

President of the African Development Bank ,Akinwumi Adesina says Africa’s ballooning external debt, which reached $824bn in 2021 has complicated debt resolution and compromise countries’ future growth, which is undermining African economic potential.

A statement from the bank, Adesina said this at the Semafor Africa Summit, taking place on the sidelines of the International Monetary Fund and World Bank 2024 Spring Meetings, and to discuss the challenges posed by Africa’s ballooning external debt, which reached $824bn in 2021, with countries dedicating 65 per cent of their GDP to servicing these obligations.

He also said, the continent would pay $74billion dollars in debt service payments this year alone, with a sharp increase from $17billion dollars in 2010.

Adesina stressed the need to address the structural issues in Africa’s debt landscape, while acknowledging the fiscal pressures faced by African nations due to the COVID-19 pandemic, infrastructure needs, and rising inflation, adding that, the shift from concessional financing to more expensive and short-term commercial debt, with Eurobond debt now accounting for 44 per cent of Africa’s total debt, up from 14-17 per cent.

The ADB boss also criticized the ‘Africa premium’ that countries pay when accessing capital markets, despite data showing that Africa’s default rates were lower than those of other regions, and demanded that the risk perception be changed, as it has been driving up borrowing costs for African countries.