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COVID-19: African economies now more vulnerable to debt traps

3 mins read
  • Vaccine equity will help solve Africa’s rising debt issue – AfDB

On the back of the COVID-19 pandemic, many African countries are now more vulnerable to debt traps than ever. This was the position canvassed by the Director-General of the World Trade Organisation (WTO), Dr. Ngozi Okonjo-Iweala at the ongoing virtual Annual General Meeting of the African Development Bank (AfDB).

The debt to GDP ratios may have increased in countries around the world, however, in African countries, long before the pandemic, debt levels were already rising. “In 2019, several African countries had debt ratios of about a 100%, with many countries reaching levels not seen since the epic restructurings 15 to 20 years ago”, according to the WTO DG.

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This time, Africa will need more than aid to extricate itself from the debt trap it’s in. To be able to rejoin the rest of the world in global travel and related trade, Africa must first be vaccinated.

However, the continent is experiencing vaccine inequity. Compared to developed countries with 75 doses per 100 people, Africa has received 3.2 COVID-19 doses per 100 people.

According to Okonjo-Iweala, what this means is that beyond the health implications for many Africans, “low vaccination rates mean that economic life cannot fully resume and African countries risk exclusion from global travel and related trade.”

President of the AfDB, Akinwunmi Adesina in his remark, said equitable distribution of vaccines would help solve Africa’s rising debt. “Without vaccines, the economy will not recover and people and countries will not earn revenue and then we’re going to continue to have problems of debt because they cannot pay back. So vaccine is critical to get that done.”

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In related news, experts have asked the Nigerian government to put an end to borrowing to fund the countries recurrent expenditure if the country wants to reduce its rising debt burden.

The charge was given at a webinar at the launch of online business newspaper, Prime Business, published by multimedia company Newstide Publications Limited.

Dr. Bongo Adi, who was the keynote speaker on the theme ‘Debt Burden and Quest for Economic Recovery’ said it was worrisome that 90 percent of the revenue generated by Nigeria was being used in servicing the country’s debt.

Also speaking, renowned career diplomat Ambassador Ejeviome Otobo, who was part of the panelists said that “any country that begins to borrow to pay its recurrent expenditure is in deep trouble.” According to him, it was bad enough that the country was borrowing so much, “but it is even worse that we are using it to pay for recurrent expenditure.”

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