Akinwumi Adesina, president of the African Development Bank (AfDB), denied the alleged debt crisis in African countries during an interview on the sidelines of the Forum on China-Africa Cooperation (FOCAC), Beijing Summit.
“Let me be very clear: Africa has absolutely no debt crisis,” Adesina told the media after a discussion at the high-level dialogue between Chinese and African leaders and business representatives, which was closed Tuesday as part of the FOCAC Beijing Summit.
Africa saw an overall debt-to-GDP ratio of 37 per cent last year, which, albeit up from 22 per cent in 2010, is within the reasonable range for low-income countries, Adesina said, stressing the ratio is markedly lower than 100 per cent or 150 per cent of many higher-income countries and over 50 per cent of emerging economies. For years, China has been providing money-starved African countries with loans that are urgently needed to build roads, power plants, and factories, as infrastructure is considered the precondition for African countries to propel industrialisation and achieve prosperity.
African observers say that Chinese investments in Africa will not add any debt burden to the continent. In the long run, they will ease it. Chinese loans are mainly dedicated to the infrastructure in Africa, which is the prerequisite to attract the foreign direct investment. If a country has good infrastructure, the investors will come and they will create jobs and generate more income for the governments.
“African countries are desperate for infrastructure. The population is rising, urbanisation is there, and fiscal space is very small,” the AfDB president said. “They are taking on a lot more debt, but in the right way.”
A China-Africa infrastructure cooperation plan will encourage Chinese companies to participate in Africa’s infrastructure development, with focus on energy, transport, telecommunications and cross-border water resources. Established in 2000, FOCAC functions as an important platform for China and Africa to pursue win-win cooperation.