As if all problems and brakes we have talked about so far were not enough, this week The Economist highlights another worrying scenery: national debt – which decreased a lot while the continent was growing – is going back to the nineties’ levels, when western countries gave Africa a discount and reduced the debt. Today the debt is reaching 60% of the entire GDP.
The International Monetary Fund states that more than a half of sub-Saharan countries are rising their debts in an uncontrolled way and that in Africa loans’ interest rates are often two-digit percentages – western interest rates don’t exceed 1%.
Lots of western banks are earning lot of money because of these African countries’ bonds – even if they are quite “dangerous”. One thing is taking 1%, another thing is wanting 12%, as it happened with Senegalese bonds, worth 2.2 million dollars.
This situation shows that western countries are keeping on “using” Africa, but also, at the same time, that Africa is doing nothing to start a virtuous circle.
The money which has been lent hasn’t been used to start a virtuous economic circle, where development is created, people manage to earn more and to pay for taxes, country develops and has more money to spend for services, hospitals and schools improve, and so on…
Not at all. And moreover, corruption has often “eaten” off the development.
Today Zambia spends more money for debts’ interests than for education and Kenya loses 5 billion dollars – when its GDP is 70 billion dollars. Not talking about Mozambique and Ghana, having debts which cannot be paid back. And these are only few examples.
The IMF invites all countries to tighten their belts and wants a stricter tax system. Useless words.
When population grows in an uncontrolled way, and African countries’ economies grow too little – and money often ends in few people’s pockets –, it is impossible to solve problems and the entire situation gets really dangerous.
And default becomes a reality.