African governments should decry penchant for Eurobonds

  Indeed, African governments are reaping a plethora of benefits from the inclusion by international financial markets to broaden the scope of their funding sources, swiftly abandoning foreign aid and traditional multilateral institutions.   International financial markets have opened a window thereby providing a suitable platform for African governments to borrow, chiefly for capital spending through Eurobonds issuance. However, this opportunity has been watered down by overexploitation through excessive borrowing. Consequently, debt has been accumulating devoid of a meticulous assessment of risks posed and the consequences thereof, such as exchange rates and the real repayment costs for the piling debt.   The International Monetary Fund (IMF) has pinpointed a total of 17 African countries, with outstanding Eurobonds as near or under debt distress. African governments have been borrowing through issuing Eurobonds which are international bonds supplied by a country in a foreign currency, commonly in US dollars and euros which allows them to borrow in large amounts. Eurobonds borrowing is conducted in commercial terms, whereby the currently prevailing market conditions dictate the interest rate, term of bond and coupon payment. This colossal appetite for African Eurobonds has been galvanizing issuances in the continent, leading to the oversubscription by African states and is driving debt stock to unsustainable levels.  Eurobonds have thrust African governments headlong