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Browsing: china and africa
Some 11 sub-Saharan African (SSA) countries are currently at high risk of debt distress according to the latest debt sustainability analyses by the International Monetary Fund (IMF).
Already, six countries are in debt distress and the debt burden is worsening in the region where the public debt ratio to gross domestic product has surged to 65.6 per cent from 56.4 per cent pre-Covid-19 period.
A study conducted by the China-Africa Research Initiative (CARI) at Johns Hopkins University shows that there is a trend where African governments are mortgaging their natural resources to secure loans from China. This has often ignited debt distress when commodity prices collapse.
Read: Why do lenders want “COLLATERAL”?
This mortgaging of resource is referred to as collateralized sovereign debt. This is where a sovereign loan is secured by existing assets or future receipts owned by the borrowing government. The collateral could be commodities, future export revenues, …
Folktales and fairy tales alike carry stories of ordinary beings rising through superhuman ways to become extraordinary. The story of China’s rise to global dominance reads much like a fairy tale. Just a simple agrarian-based economy in the 1960s, it has grown to become a world superpower in less than a decade. This phenomenal growth is outstanding and carries hope for Africa. The question is can Africa replicate the Chinese story?
The recent IMF’s World Economic Output 2020 revealed a new world order. According to the report, the US economy at $20.8 trillion trails the Chinese economy at $24.2 trillion. These statistics are based on purchasing power parity, a measure of the power of a currency to buy the same goods and services within its own shores.
This implies that you can buy more with a dollar in China than you would in the US. By this metric, China’s economy …