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Ciku Kimeria
Writer, Adventurer, Development Consultant, Travelblogger
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piqer: Ciku Kimeria
Wednesday, 10 January 2018

Africa's future debt crisis if Western economies improve

The IMF does not go without significant criticism in Africa especially given the history of structural adjustment policies in the 1980s and 90s that required African countries to rapidly privatize institutions in order to qualify for financing. Such programs have been criticized for the rapid privatization and deregulation that plunged several African countries into social crisis.  Some of the major effects of the programs included the removals of subsidies on food staples, the widespread retrenchment of workers, a rise in cost of social services and goods and reduced wages for workers. 

As a result, most Africans are extremely apprehensive of any widespread reform programs proposed by the World Bank and the International Monetary Fund (IMF) especially any that involve conditional lending. 

In this particular interview by IMF's current chief, Christine Lagarde, an interesting question is however brought up. What will the effect be over the next few years of recent sovereign bonds totaling over $20 billion that have been taken by African countries over the past few years?

Lenders were so eager to lend that I don’t think they were very serious about assessing the risks and assessing their exposure. And there was clearly, on the part of some investors, in the private sector in particular, a drive to push as much debt as possible in order to generate some yield.

She also touches on - leapfrogging and how it's meant to be the panacea for everything that ills the continent. This issue is most eloquently written about by the recently deceased Kenyan born thinker in innovation and technology and Harvard Kennedy School Professor - Calestous Juma. In his essay, Leapfrogging Progress - The Misplaced Promise of Africa’s Mobile Revolution he states, "The failure of the mobile revolution to stimulate industrial development in Africa is the result, in part, of a faulty narrative that assumes that Africa can leap into the service economy without first building a manufacturing base.

Africa's future debt crisis if Western economies improve
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