Markets and investing
Raising money is getting tough for Africa
Debt and debt sustainability has become a common theme in regards to Africa in recent times. In times past, countries across the continent ventured into the international debt markets and the markets looked favorably upon them, after all, Africa was rising! But the rise stalled and then fell with commodity prices particularly for the heavily resource-dependent states such as Angola
and Nigeria piling pressure on local currencies and driving up inflation. And while there are steps to contain debt in some cases, African states continually find themselves under pressure to borrow more, whether to finance massive (and sometimes questionable) infrastructure projects or simply to repay old debt. For other states however, the situation is so dire
defaulting has become a reality. Resource-dependency, however, is just one reason for these debt troubles, politics and poor fiscal management are the culprits in other instances. The result is investors will place a higher risk premium on interest rates, which are already likely to go up with rising interest rates in the U.S.
So what’s the way out for Africa? China?