The African continent is in trouble, deep economic trouble. The latest World Bank assessment is that most African countries are drowning in unsustainable debt.
There have been even some allegations on social media that some countries have mortgaged their ports to the Chinese – the new punching bag – and now they are calling in their debt from a country that cannot pay because “prudent borrowing” was not part of their vocabulary.
Recently, Tanzanian President John Pombe Magufuli revealed that he had cancelled a deal signed by the previous administration to build a new port. He said that the deal was tantamount to selling the country to a foreign power.
Many countries are falling into the trap of getting what they think is easy money to invest sometimes in vanity projects, thereby sinking deeper into unsustainable debt.
That has been the undoing of many that their credit ratings are so low that they cannot get concessional loans and have to go to the more expensive open market. Concessional loans are the kind one gets from lending institutions that come with better payment terms.
Rwanda, luckily, is not among those countries. In fact, the World Bank says it is one of the only four countries on the continent still in the safe zone, well below the advisable 50 per cent of GDP, at 32.9 per cent
The World Bank rates countries’ risk of debt distress in four categories; high, moderate, in-distress, or low. So Rwanda is in the low category through “… careful borrowing, proper loan management and high economic growth.”
That is the reality of Rwanda’s economy; pragmatic investments in priority areas, accountability and maintaining a steady growth year-in year-out. Some economic “experts” out there who have been spelling Rwanda’s economic doom need to change their books.