Dealing with Debt Dependency in Africa
Jackie Edwards-Mareeg.com-Many African countries are currently facing a financial crisis that affects citizens from all walks of life, leaving nations without the funds necessary to maintain social infrastructure. Almost fifty percent of the population lives off of $1.90 or less each day, with families across the nation lacking adequate food or shelter. Violence also plagues many countries, increasing the likelihood that local populations remain impoverished.
In order to tackle poverty, the issue of debt in African nations must first be addressed. Since the 1980s, the continent has seen a debt crisis that has only gotten worse over the past thirty years. In 2020, many nations are expected to face having to negotiate bailout packages or default on loans if they fail to improve their economic standing. Though progress has been slow, local and national governments have been taking steps to help mitigate the financial crisis that’s currently plaguing countries across Africa.
Africa’s Most Indebted Nations
Africa is home to many impoverished countries, with seventy-five percent of the world’s poorest countries located in the sub-Saharan region. Despite economic growth in many of these nations, they still owe billions in debt to overseas lenders and foreign institutions. The African countries with the greatest external debt include:
● South Africa: $144.6 billion
● Egypt: $62.38 billion
● Sudan: $51.26 billion
● Morocco: $44.65 billion
● Nigeria: $31.41 billion
● Tunisia: $28.93 billion
● Angola: $27.14 billion
● Ethiopia: $24.82 billion
● Ghana: $21.95 billion
● Tanzania: $15.21 billion
External debt in Africa is by no means limited to these countries. Other nations also owe significant amounts to foreign entities, with Somalia owing $2.892 billion as of 2015. Many of these countries also hold private debt that makes up a substantial percentage of GDP.
What Can Be Done
Africa is home to vast caches of natural resources, producing more than 20% of the world’s gold, 50% of diamonds, 12% of oil and 6% of natural gas. Much of the potential for growth in these sectors remains untapped, however. Nations crippled by debt don’t have the financial strength and stability to invest in local enterprises.
While relief efforts may do some good in helping indebted countries to encourage economic growth, they foster a dependency from which many nations are seeking to escape. Corruption within the system also means that not all aid reaches its intended destination.
Instead of turning to relief efforts, local and national governments need to focus on improving infrastructure and investing money in industries such as agriculture and manufacturing. By producing more exports and fostering trade, impoverished nations can grow their GDP and reduce external debt. Many African governments are currently making strides towards financial stability, including efforts to encourage privatization and liberalize marketplaces.
As countries become more competitive on a global scale, families across the continent will hopefully see an improvement in their standard of living. By solving the nation’s debt crisis, African governments can take the first step towards eliminating poverty within their population. jackie Writing Jackie <firstname.lastname@example.org