Sovereign debt in Africa exceeds $1 trillion – Gatete
The African continent, despite being one of the most endowed in natural and human resources, is struggling with mounting debt. Currently, sovereign debt in Africa exceeds $1 trillion.
Speaking at the 44th SADC Summit of Heads of State and Government in Harare, Zimbabwe, Dr Claver Gatete, UN Under-Secretary and Executive Secretary of the Economic Commission for Africa (ECA), acknowledged that the meeting was taking place at a time when Africa is facing major challenges, especially financing, security, soaring debt levels and climate change.
“Sovereign debt in Africa is over $1 trillion, causing severe fiscal crisis, with more than one in three countries in or at high risk of debt distress,” he said.
Dr Gatete pointed out that this is also happening when long-term concessional finance, official development assistance and foreign direct investments are declining.
“In addition, climate change is eroding 5 per cent of GDP on average annually. These impacts are quite evident in the SADC region. That is why we are working on an African position on the reform of the global financial architecture so that Africa’s needs are taken into account at next month’s Summit of the Future and at the Fourth Financing for Development Conference that will take place next year, in Spain,” he said.
According to him, there are no clear solutions.
He noted that African countries have no choice but to look inward for homegrown solutions including domestic resource mobilization and innovative financing for climate to sustain development.
“And SADC can be a leader on this imperative. The region is home to most of the world’s gold, copper, cobalt, lithium, chromium, graphite, platinum and possesses significant livestock and agricultural endowments. Four key areas offer SADC innovative and scalable solutions. One of them is the development of regional value chains and this is possible in the whole of SADC. Regional agglomeration remains a ticket to sustainable industrialization because fragmented approaches will not generate the jobs we need, nor will it reduce poverty and inequality,” he said.
Citing recent visits to Botswana, Namibia and Ethiopia to study the beef and leather value chains, he said, they reached the conclusion that all of SADC offers enormous potential to increase the export markets within these sectors.
“That is why we partnered with the Arab Bank for Economic Development in Africa (BADEA), who have now approved grant financing for a feasibility study in the beef sector for Botswana that will be conducted by ECA, working closely with the SADC secretariat and partners. This will be replicated to other SADC Member Countries. We also plan to do similar work for the leather sector. In tandem, is the energy regional value chain,” he added.
Dr Gatete urged that efforts towards energy solutions must be from a regional perspective.
“For example, SADC is using only one per cent of its solar and wind energy potential. This means that SADC can be a continental energy provider with the development of this value chain,” he said.
He indicated that there is no reason why Africa should import food to the tune of $120 billion per year when the SADC region can be Africa’s breadbasket.
“This is also why we are embarking on the establishment of the Zambia-Zimbabwe Common Agro Industrial Park, again working with BADEA, who have also approved grant financing for a study to move forward with this initiative,” he said.
Among other things, he said “our critical minerals can deliver fair and inclusive prosperity. Our fundamentals for this agenda are stronger than anywhere else in the world. But our window of opportunity is closing.
We are using our study on the DRC-Zambia electricbattery initiative as a proof of concept that we can and should drive mineral beneficiation, and we are working on a road map to translate this into a reality that will allow expansion to other minerals, such as diamond.”
The Summit is under the theme: “Promoting Innovation to unlock opportunities for sustained economic growth and development towards an industrialized SADC.”
By Emmanuel K Dogbevi