By Rumbidzai M. Masango
Africa’s rising debt levels pose a significant threat to development. Statistics show that what was foreign debt of approximately US$170–210 billion for sub-Saharan Africa between 1995-2005 (when the G7 debt relief lowered it by 10 per-cent) has risen to nearly to $407 billion by 2018 (Jubilee Debt Campaign, 2018). According to The Economist, public debt has climbed above 50% of the Gross Domestic Product (GDP) in at least half of sub-Saharan Africa. The risk of a massive economic crash is growing.
This scenario is exacerbated by sluggish economic growth and the increase of debt as a share of GDP. For policymakers and development practitioners, such a combination presents significant challenges, especially when considering the role and impact of debt. To be fair, debt can – and should – foster economic growth and development. However, where such debt is acquired recklessly, and without due consideration to terms and conditions for repayment, consequences can be dire. Therefore, much emphasis should be placed on how debt is acquired, managed and deployed as a tool for sustainable development.