President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, has expressed concern about the burgeoning debt ratio of most countries in Africa to their Gross Domestic Product (GDP) , describing the debt profiles as unsustainable.
Adesina expressed his worries about the countries’ growing level of indebtedness at the launch of the African Economic Outlook 2021 held virtually with the theme, ‘From debt resolution to growth: The road ahead for Africa’.
This is even as he noted the rising illicit capital flow from the continent estimated at over $70 billion yearly as multinational corporations continue to evade taxes, thereby worsening the revenue challenges of the various countries in the continent.
The development banker said: “The issue of debt is so fundamental because it’s like you are running up a hill but you have a bag full of sand on your back, you can’t go far. The amount of debt that we have is not sustainable.
“The amount of debt that we have right now is about 70 to 75 per cent of the Gross Domestic Product. It used to be sustainable, but what is even more alarming is the structure of the debt, where the debt right now is largely in the hands of commercial creditors, almost $337bn in terms of high creditors and those that are the private creditors without any type of securitisation for it. That is very worrying indeed.”
He added, “Today, the amount of illicit capital flow is over $70bn; you have multinational companies that are not paying their taxes, we are losing billions of dollars to that. There needs to be a look at that”, Adesina added.
On the steps taken by the multilateral and other global institutions to mitigate the debt burden, he explained that the G20 was working to support “temporary debt relief for developing countries through the Debt Service Suspension Initiative.”
The AfDB President urged the debtor nations’ governments to continue to plug areas of leakages in their tax and other fiscal policy initiatives to enable them reduce illicit capital flow from their shores to the barest minimum.