AfDB inaugurates initiative to spur home-grown solution to debt challenges

The African Development Bank’s (AfDB) African Development Institute (ADI), has inaugurated a programme, the African Debt Managers’ Initiative Network (ADMIN), to provide home-grown solutions to Africa’s debt challenges.

A statement issued by AfDB on Saturday in Abuja, said the inauguration and first peer-learning event took place in Addis Ababa.

AfDB’s Director, Mr Coulibaly Abdoulaye said the network would provide tailored and homegrown solutions to the continent’s debt challenges.

According to Abdoulaye, the network will also strengthen the debt management’s capacity of African countries’ officials and institutions to rapidly resolve the debt challenges faced by these countries.

He said it would restore macroeconomic stability and support inclusive growth, as well as promoting the exchange of experiences among debt managers in regional member countries.

Meanwhile, ADI’s Director, Eric Ogunleye, said the growing financing needs for infrastructure development, poverty reduction, mitigating climate change, and tackling insecurity were driving African countries to increase their borrowings.

Ogunleye said the listed challenge was also increasing debt vulnerability on the continent.

He said rising debt vulnerability and weak debt management capacity on the continent had continued to worsen macroeconomic outcomes and hamper effective policy responses to shocks, and exacerbating debt distress in some countries.

“There is, therefore, a growing need to strengthen debt management capacity in African countries.

“As of April 30, about 13 countries out of the 38 African countries with debt sustainability assessment data are at high risk of debt distress and six are already in debt distress

“A larger share of African debt is now owed to external bondholders and creditors outside the Paris Club who deal directly with debtor countries.

“This high-cost debt imposes a significant burden of debt servicing on African countries averaging 18 per cent of total government revenue, ” he said.

According to him, the meeting underscores ways in which the continent can develop cheaper and more stable sources of debt financing for its many development needs.

He said the discussions focused on sound debt management frameworks, networking, and peer learning to support the development and deepening of domestic debt markets in Africa to promote debt sustainability.

The statement also said a former Director of Debt Management at South Africa’s National Treasury, Johan Krynauw, encouraged African countries to work more closely together to promote knowledge sharing and support each other on debt management issues.

“In recent years, there have been many institutional initiatives from outside the continent to help African countries.

“The question is always why it did not work, and why we still have public finance and debt management problems today?

“Africa has reached a stage where it has enough skills, knowledge, and experience to determine what works for its countries. Context matters and we need to find solutions to local problems.

“That is one of the reasons the initiative was created for public debt managers in Africa to work together,” Krynauw said.

Also, the Director of Research and Strategy at the Bourse Régionale des Valeurs Mobilières (BRVM), Jean Naka, the regional stock exchange of the West African Monetary Union, underlined the importance of domestic markets.

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