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African debt crisis

We are in this article making an attempt to correlate some key figures relating to a selection of African countries, available from multiple sources and cross-checked to the extent possible. We decided to list them based on international aid received (excluding military) in excess of $1B in 2017. (All figures in $M)

With 2 notable exceptions, aid logically goes to the poorest. Surprisingly enough, Egypt and South Africa, ranking among the best in class on the continent (in terms of GDP/capita of HDI) cashed almost $7B last year. Because of their superior ranking probably, their capacity to raise external debt is higher, but quickly becoming excessive: 101% of GDP and $83B for Egypt, 53% but a whopping $204B for South Africa.

For other countries, the profile is not surprising, they rank low in terms of HDI or GDP per capita, and are at the same time buried with debt, with an estimated 40 per cent of the region’s countries now at high risk of debt distress — double the proportion of five years ago, and just 13 years after the Multilateral Debt Relief Initiative, which cancelled debt for countries that met economic-management and poverty-reduction criteria.

Officials urge African countries to raise taxes to service their debt. But while tax revenues generally account for over a third of GDP in OECD countries, they account for far less in sub-Saharan Africa, where they correspond to less than a fifth of GDP, because (i) population is poor and (ii) the tax collection system is performing badly, hence the growing debt, hence the need for aid. Any debt relief in the future will be far more complicated than in the past because most recent lending has come from commercial sources (mostly Chinese) less prone to debt forgiveness than are national governments.

While the so-called elites manage these debt issues with little consideration for their population, the Mangrove Foundation will contribute to a better live for those whose fate provokes little interest.


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