Emmanuel OchayiRenowned economist Professor Jeffrey Sachs has highlighted the challenges facing Africa’s economic development, emphasizing the need for long-term financing solutions.
Speaking at the Africa Union summit in Addis Ababa, Ethiopia, Sachs criticized the prevalent practice of short-term loans with high interest rates, stating they hinder Africa’s growth potential.
In an interview with CNBC Africa, Sachs expressed concerns over the narrow perspective of international lenders and credit rating agencies regarding Africa’s economic prospects.
He advocated for a shift towards long-term growth strategies, stressing that Africa’s development requires loans with tenures of 25, 30, or even 40 years.
Sachs emphasized, “Africa’s development prospects are enormously bright, but they require long-term commitment and investment. Short-term loans fail to address the continent’s long-term needs and contribute to liquidity problems.”
The economist pointed out that defaults on foreign debt by some African countries are exacerbated by factors such as the lingering effects of the COVID-19 pandemic and external economic pressures. He attributed the high-interest rates imposed by lenders to the hawkish monetary policies of central banks in Europe and the United States.
Furthermore, Sachs underscored the urgent need for substantial investment in infrastructure, including transportation, communication, education, and housing, to meet the needs of Africa’s growing young population.
However, he noted that governments have struggled to raise capital locally and have turned to foreign lenders, prioritizing returns over sustainable development.
In conclusion, Sachs urged countries, credit rating agencies, and international lenders to embrace a long-term perspective and prioritize investments that foster sustainable growth in Africa.
He emphasized that by aligning financing strategies with Africa’s long-term development goals, the continent can unleash its full potential and achieve lasting prosperity.
