ByZhangZhongxiang
ISTOCKResearchbytheUK-basedJubileeDebtCampaignshowedthatdebtinsomeSub-SaharanAfricacountrieshasincreasedby50percentinthepasttwoyears,thehighestlevelsince2005.InternationalorganizationssuchastheWorldBankandtheInternationalMonetaryFund(IMF)havealsoissuedwarningsaboutpotentialdebtcrisisinAfrica.InMay,theIMFwarnedthatSub-SaharanAfricannationswereatriskofdebtdistressduetoheavyborrowingandgapingdeficits,despiteanoverallriseineconomicgrowth.
Infact,thecurrentAfricandebtcrisisispartial,with12Africancountriesrecordinghighdebtrisks,accountingforonly22percentofthetotalnumberofAfricancountries.Inaddition,comparedtothehighestpointofhistoricalAfricandebt,thecurrentAfricandebtriskisrelativelycontrollable.In1999,Africa鈥檚externaldebtreached$350billion,equivalentto93percentofthegrossdomesticproduct(GDP)ofAfricancountries(excludingSouthAfrica).Atpresent,Africa鈥檚externaldebtaccountsforlessthanone-thirdoftotalGDP.From2015to2017,Africa鈥檚externaldebtaccountedfor27.8percent,31.1percentand32.4percentofGDPrespectively.
Debtdrivers
ThecurrentincreaseofdebtinAfricaismainlyaresultofdecreasedcommoditypricesandaslowdownineconomicgrowth.
Inrecentyears,duetothesluggishglobaleconomy,weakdemandforbulkcommoditieshasledtoadeclineincommodityprices.Takingcrudeoilpriceasanexample,thepricehasdroppedfrom$114.8perbarrelinJanuary2014toanaverageof$43in2016.Inadditiontocrudeoil,metalrawmaterialsfellby6percentin2016comparedto2015.Since2014,thecommoditypriceindexhasfallenbymorethan40percent.
TheeconomicstructureofAfricancountriesissingularandtheeconomieshaveahugedependenceontheworldmarket.ThechangesofglobalcommoditypriceshaveagreatimpactoneconomicdevelopmentofAfricancountries.Inrecentyears,thecontinuousdeclineincommoditypricesintheglobalmarkethasheavilyimpactedAfrica鈥檚economicdevelopment,especiallythoserelyingontheexportofrawmaterials.TheeconomicgrowthrateinAfricahasdroppedfromaround5-6percentto3.7percentin2015andonto1.7percentin2016.TaxationinAfricancountrieshasalsodecreasedfrom$499billionin2014to$444billionin2016.Theincomedeclineinreturnaffectstheirabilitytorepaydebts.
Inaddition,withthestrengtheningoftheU.S.dollarandthedepreciationofAfrica鈥檚nationalcurrencies,thedebtburdenofsomeAfricancountrieshasbeenincreased.Since2014,theappreciationoftheU.S.dollarhasreached15percent.InsomeAfricancountries,largecurrencydevaluationhasoccurred.Forexample,Mozambique鈥檚currency,Metical,depreciated56percentagainsttheU.S.dollar,andtheAngolancurrencyKwanzahasdepreciatedby41percentagainsttheU.S.dollar.
Alleviatingdebtburden
Everycountryneedsfinancingsupportduringtheeconomictake-offphase,especiallyintheinitialstageofindustrialization.Withoutfinancialsecurity,industrializationandmodernizationinAfricaaredifficulttoachieve.ChinaisnotthemaincreditorofAfricancountries.China鈥檚financingsupportforAfricaismainlyinvestedininfrastructureconstructionandproductionareas,whichhavegreatlyimprovedtheeconomicdevelopmentenvironmentandhelpedAfricaattractforeigninvestment,andenhanceitsindependentdevelopmentcapability.
China鈥檚loanstoAfricaaremostlyconcessionalloanswithlowinterestrates.Inaddition,thethreemajoradvantagesofChineseinfrastructureconstructionenterprises-highcostperformance,fastadministrativeapprovalprocessandhighquality-savealotofinfrastructureconstructioncostsforrelevantcountriesandcreatedalotofemploymentopportunitiesforthelocals.IthasbeenrecognizedbytheinternationalcommunitythatChineseinvestmenthasboostedAfrica鈥檚economicgrowth.
InJune2017,McKinseypublishedareportcalledDanceoftheLionsandDragons,whichpointedoutthatChina鈥檚investmentandbusinessactivitiesinAfricabroughtthreemajoreconomicdividendstotheregion.Thefirstisjobcreationandskillsdevelopment.Amongthe1,000ChineseenterprisessurveyedinAfrica,89percentofemployeesareAfrican.Thesecondisthetransferofknowledgeandnewtechnologies.ChinesecompanieshavepromotedthemodernizationofAfricanmarketsbyintroducingnewproductsandtechnologiestoAfricancountries.Inthepastthreeyears,about48percentofChinesecompanieshaveintroducednewproductsorservicestoAfrican,and36percenthaveintroducednewtechnologies.Thethirdisfinancingandinfrastructuredevelopment.China鈥檚low-costfinancingchannelsandsignificantimprovementsininfrastructurehavebeenwidelyrecognizedbyAfricancountries.Asaresult,China鈥檚investmentandfinancinginAfricaisconducivetoalleviatingthedebtburdenofthecountriesconcerned.
Developmentiskey
Atpresent,heavily-indebtedcountriesinAfricaaremostlythosewithsimpleeconomicstructuresdependentontheexportofresources.Therefore,itisimportantforAfricancountriestodevelopanindependentandsustainableeconomy.
Infact,someAfricancountrieshavealreadybeguntheireconomictransformationforadiversifiedeconomybydevelopinginfrastructure,unlockingthepotentialoftheprivatesector,helpingworkersimprovetheirskillsandcreatingjobs-especiallyforwomenandyouth.Manyoftheseattemptsaresuccessful.Forexample,EastAfricancountrieslikeDjibouti,Ethiopia,Kenya,RwandaandTanzania,withouthavingrichmineralresources,achievedsoundeconomicgrowthin2015and2016,withahighergrowthratethanmanyAfricancountriesrichinmineralresources.Byrestructuringtheireconomiesforcomprehensivedevelopment,thesecountrieswithfewerresourcesmaderemarkableachievements.In2015,Ethiopia,IvoryCoastandRwandasawagrowthrateof10.2percent,8.8percentand7.1percent,respectively.
Inaddition,tosolvethedebtproblem,itisnecessarytoadheretotheconceptofintensivedevelopmentandemphasizetheenhancementoftheindependentandsustainabledevelopmentofAfricancountries,topreventthemfromincreasingtheirdebtburden.ThisissomethingChinaisawareof.OnJuly2018,ChinesePresidentXiJinpingmadearemarkinasignedarticlepublishedbytheSenegalesedailynewspaperLeSoleilaheadofhisstatevisittothecountry.XisaidChinawishestohavecloserdiscussionsandcooperationwithSenegaltoseetoitthatfinancingarrangementsarebasedonsoundplanning,economicallyfeasibleanddoneinastep-by-stepmanner,thusensuringtheirsustainability.Withthegradualimprovementoftheworldeconomicsituation,Africa鈥檚economyisgenerallystabilizingandrecovering.AccordingtotheIMF,Africa鈥檚economicgrowthratewillreach3.4percentin2018and3.8percentin2019.Therefore,thereisreasontobelievethatthepossibledebtcrisisofAfricancountrieswillbeeasedastheseeconomiesbegintogrow.
Heavily-indebtedcountriesinAfricaaremostlythosewithsimpleeconomicstructuresdependentontheexportofresources.Therefore,itisimportantforAfricancountriestodevelopanindependentandsustainableeconomy.
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