Stop begging West for loans, Ghana president tells African leaders

Ghana’s President, Nana Akufo-Addo has urged his African counterparts to stop begging for loans from the West so that the continent can earn global respect.  The Ghanaian president made this known during his opening remarks at the ongoing US-African Leaders Summit in Washington DC on Tuesday. About 50 African leaders and delegates are attending.  Akufo-Addo […]

Ghana’s President, Nana Akufo-Addo has urged his African counterparts to stop begging for loans from the West so that the continent can earn global respect. 

The Ghanaian president made this known during his opening remarks at the ongoing US-African Leaders Summit in Washington DC on Tuesday. About 50 African leaders and delegates are attending. 

Akufo-Addo said the African countries will change the poor perceptions that the developed countries have about the continent if they stop begging. 

He advocated that the resources in Africa should be spent on the continent to make it prosperous and get respect. 

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Akufo-Addo said: “If we stop being beggars and spend African money inside the continent, Africa will not need to ask for respect from anyone, we will get the respect we deserve. If we make it prosperous as it should be, respect will follow.” 

Akufo-Addo’s admonition came on the day that the International Monetary Fund (IMF) agreed to give Ghana a $3bn (£2.4bn) loan to alleviate an unprecedented economic downturn in his country. 

Ghana’s external debt reached USD 28.1 bn in Jun 2022 with the International Monetary Fund (IMF) forecasting Ghana’s debt to Gross Domestic Product (GDP) ratio of 84.6 per cent in 2022.

Already burdened by high debt, Ghana faces historic inflation of more than 50%, a 21 year high and a fall in the value of its currency – the cedi – economic difficulties worsened since the Russian invasion of Ukraine.

 

Buhari seeks US support for $1.9trn energy plans 

Speaking at the summit on Tuesday, President Muhammadu Buhari asked the United States to support Nigeria’s $10b annual energy investment plans. The initiative aimed to achieve 30 gigawatts of energy by 2030. 

The president, who restated the Nigerian government’s determination to achieve the target by 2030, made the requests during the discussion panel on Just Energy Transition at the ongoing US-Africa Leaders’ Summit in the American city. 

A statement by Senior Special Assistant to the President on Media and Publicity, Garba Shehu, quoted the president making the request in a rundown given in his address at the event. 

“For instance, our analysis shows that delivering the Energy Transition Plan requires $1.9 trillion spending up to 2060, including $410 billion above business-as-usual spending. 

“This additional financing requirement translates to a $10 billion investment needed per annum. Between 2000 and 2020, just $3 billion per year was invested in renewable energy in the whole of Africa. 

“Consequently, the $10 billion per year target of our Energy Transition Plan represents a significant scaling of current investment flows and we need support from the U.S. to mobilize the needed resources.”

 

Nigeria’s foreign debt profile 

Nigeria’s total external debt rose from $10.32bn on June 30, 2015, to $40.06bn as of June 30, 2022.

The breakdown shows that there has been an increase of 288.18 per cent in seven years, according to the external debt stock reports by the Debt Management Office. 

A breakdown shows that in 2015, 36 states had $3.27bn external debt while the federal government had $7.05bn. 

By 2022, states’ external debt rose to $4.56bn, while the federal government’s external debt increased to $35.5bn. 

The debts included loans from multilateral sources such as the World Bank, the African Development Bank and the International Monetary Fund. 

They also included bilateral loans from China, France, Japan, Germany and India, as well as commercial sources including Eurobonds and Diaspora bonds. 

Nigeria’s external debt ballooned as the naira lost value, increasing Nigeria’s debt service burden and worsening its ability to service debt. 

 

African leaders borrow to fund wasteful ventures – Economist 

Reacting to the development, experts said borrowing from the host by African leaders is not bad, but faulted the utilisation of such loans contending that leaders on the African continent often borrow for wasteful ventures. 

Speaking to Daily Trust on the issue, Chief Economic Analyst for the Economic Community for West African States (ECOWAS), Professor Ken Ife, said even the Ghanaian president that made the comment is currently seeking a $3 billion loan from the International Monetary Fund (IMF). 

He said: “The statement by the Ghanaian president cannot hold water because borrowing is not a crime. What is important is what you use the money for and whether it is capable of repaying itself. 

“Many leaders of the world borrow to invest in economic activities that can create jobs and stimulate growth because no matter how much you borrow, you must invest it in something meaningful that can repay itself that is how it is meant to be,” he said. 

Prof. Ife however lamented that African leaders have over the years not been investing monies they borrow. 

“The problem with African leaders is that sometimes, many of them borrow monies and use them on infrastructure that has no economic relevance and cannot create jobs or stimulate economic activity. 

The end product is that these monies don’t achieve the desired goal because there was no proper investment, that is the situation we find ourselves in,” he added. 

Also speaking, Executive Director at the Centre for Fiscal Transparency and Integrity Watch CeFTIW, Yakubu Umar also noted that it will be difficult for African leaders to stop borrowing.

He however believes that leaders on the continent can check wastage to reduce their frequency of borrowing. 

“It is not a bad thing to borrow entirely. But what African leaders need to do is to reduce waste as we have now moved from corruption to wastage. 

For instance, Ghana is looking for about a $3bn loan from the IMF thus, in Nigeria we can do a lot to reduce this wastage by reducing recurrent expenditure of civil servants, that way it can reduce the country’s frequency of borrowing,” he explained.

 

By Sunday M. Ogwu, Joshua Odeyemi & Philip S. Clement