The European Business Council for Africa

It is almost law of nature. Just as the female praying mantis eats her mate after copulation, so too can borrowers and lenders fall swiftly out of love. One minute they are sweetly wooing each other to consummate a deal. Then, the moment it is done, they are at each other’s throats.

So it is odd that African governments and their creditors have not yet fallen out. They have plenty to quarrel about. Africa’s debt crisis has been simmering for some time. Two years ago the imf was already anxious about a growing number of African countries in “debt distress” or at high risk of it. This crisis was brought to the boil by covid-19, which has caused economies to shrink and tax revenues to plunge. Governments have ramped up spending to fight the virus. Investors are scared. In recent weeks the bonds of nine countries have traded at prices indicating that they might not be repaid.

The imf and World Bank have lent emergency cash, but a financing gap of at least $44bn remains. Various bigwigs have called for debt relief, including Abiy Ahmed, Ethiopia’s prime minister, and Larry Summers, a former American treasury secretary. Yet neither borrowers nor lenders seem enthusiastic.

 Read the full article here.