Browsing: china debt trap

Economic growth in Sub-Saharan Africa (SSA) was projected to retard from 4.1% in 2021 to 3.3% in 2022. Photo/DailyNation
  • The Russia-Ukraine war has impacted Africa’s economic growth by increasing food shortage
  • Africa is facing impending food crisis that will see over 140 million go hungry in 2023
  • Economists remain optimistic Africa can recover against all odds

Economic growth in Sub-Saharan Africa (SSA) was projected to contract from 4.1% in 2021 to 3.3% in 2022, a regression caused by a general global economic slowdown.

Africa’s dependency on long supply chains left it vulnerable to adverse economic conditions in the global market and the global supply end. Covid-19 dealt the world a blow but Africa sailed through the storm, barely.

However, the Russia-Ukraine war disrupted grain and oil supply dumping Africa’s growth prospects notwithstanding that a number of African states are on the brink of a debt crisis.

Also Read: What does Russia’s invasion of Ukraine mean for Southern Africa?

Things were made worse with the ongoing catastrophic effects of global …

Lamu Port in Kenya. Reports of China angling to seize strategic national assets if loan obligations are defaulted are being denied.

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,