‘Africa should avoid debt trap’

Sunday News (Zimbabwe) - - Business - Oliver Kazunga Se­nior Business Re­porter

THE United Na­tions Eco­nomic Com­mis­sion for Africa has ad­vised coun­tries on the con­ti­nent to mo­bilise re­sources for in­fras­truc­ture de­vel­op­ment us­ing in­ter­nal ini­tia­tives to avoid the debt trap by in­ter­na­tional fi­nan­cial in­sti­tu­tions.

Ac­cord­ing to the African De­vel­op­ment Bank (AfDB), the con­ti­nent needs an es­ti­mated $93 bil­lion an­nu­ally be­tween now and 2020 to close the in­fras­truc­ture gap.

Re­spond­ing to ques­tions dur­ing a me­dia brief­ing on the side­lines of the 23rd Ses­sion of the In­ter­gov­ern­men­tal Com­mit­tee of Ex­perts (ICE) of South­ern Africa in Bu­l­awayo last week, the com­mis­sion’s di­rec­tor for South­ern Africa of­fice, Pro­fes­sor Said Ade­ju­mobi, said:

“At the mo­ment we should be very care­ful with the kind of loans that we get from in­ter­na­tional fi­nan­cial in­sti­tu­tions. What we are see­ing at the mo­ment on the con­ti­nent is we are mov­ing rapidly back to the debt trap; where we were in the 1980s and that has cre­ated se­ri­ous prob­lems for us and we must avoid that.”

He said it was crit­i­cal for the con­ti­nent to mo­bilise re­sources for in­fras­truc­ture de­vel­op­ment through in­ter­nal ini­tia­tives such as Pub­lic-Pri­vate Part­ner­ships as well as com­ing up with bank­able projects that can be fi­nanced by the con­ti­nent’s de­vel­op­ment in­sti­tu­tions such as African De­vel­op­ment Bank (AfDB).

Ear­lier in her ad­dress, the UN Eco­nomic Com­mis­sion for Africa deputy ex­ec­u­tive di­rec­tor, Ms Gio­vanie Biha, said in­fras­truc­ture deficit re­mains a ma­jor chal­lenge to trade fa­cil­i­ta­tion.

“The fi­nan­cial cost of meet­ing Africa’s in­fras­truc­ture needs are quite huge. Africa needs about $93 bil­lion an­nu­ally un­til 2020 to close the in­fras­truc­ture deficit. The con­ti­nent must look in­wards in fi­nanc­ing its in­fras­truc­ture de­vel­op­ment and dis­man­tling ob­sta­cles to in­tra-Africa de­vel­op­ment and the move­ment of per­sons across the con­ti­nent. We need to pri­ori­tise and se­quence the im­ple­men­ta­tion of our in­fras­truc­ture needs,” she said.

Ms Biha said in­fras­truc­ture de­vel­op­ment could be sup­ported through Pub­lic-Pri­vate Part­ner­ship.

“Ad­di­tional to lever­ag­ing on pri­vate sec­tor re­sources and ex­per­tise, the new ini­tia­tive on the ‘ Re­gional De­vel­op­ment Fund’ by Sadc is most wel­come. Sadc mem­ber states are urged to con­trib­ute gen­er­ously to this fund aimed at cre­at­ing some level of self-suf­fi­ciency in fi­nanc­ing re­gional de­vel­op­ment projects and ac­tiv­i­ties,” she said.

Ms Biha said the re­cent ini­tia­tive by Brazil, Rus­sia, In­dia, China and South Africa in cre­at­ing the African Re­gional Cen­tre to as­sist African coun­tries to pre­pare and fund bank­able in­fras­truc­ture projects was note­wor­thy.

Speak­ing at the same oc­ca­sion, Fi­nance and Eco­nomic De­vel­op­ment Min­is­ter, Dr Ig­natius Chombo, pointed out that the re­gion suf­fers from crit­i­cal in­fras­truc­ture de­fi­ciency, par­tic­u­larly re­gard­ing ac­cess to elec­tric­ity, trans­port, in­for­ma­tion and com­mu­ni­ca­tion tech­nol­ogy, wa­ter and san­i­ta­tion and ir­ri­ga­tion.

“You will agree with me that in gen­eral, power deficits are the big­gest in­fras­truc­ture chal­lenge, mar­itime trans­port has lim­ited berth and stor­age ca­pac­ity, rail in­fras­truc­ture is gen­er­ally poor and con­tin­ues to de­te­ri­o­rate, air trans­port ser­vices are ex­pen­sive and in­ef­fi­cient, and ac­cess to ICT, though im­prov­ing re­mains poor,” he said.

Dr Chombo said the gap needs to be ad­dressed for in­dus­tri­al­i­sa­tion and so­cio-eco­nomic de­vel­op­ment.

“Mo­bil­i­sa­tion of do­mes­tic pen­sion funds and other sav­ings can be crit­i­cal in sup­port­ing the de­vel­op­ment of in­fras­truc­ture,” he said.

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