Nigeria, 35 other African countries to pay $56bn interest on 4-year debts

Research by the ONE Campaign has disclosed that 36 African countries will pay $56bn interest on loans raised in the capital between 2017 and 2021.

The research stated that the sum is 500 per cent interest if the loan was through the World Bank.

Nigeria is knee-deep in domestic and external debts running into about N77 trillion with a large chunk of the government revenue expended on debt servicing.

The report blamed the huge interest rate on the combination of rising interest rates and lack of sufficient affordable capital from the World Bank which is increasing economic pressures on vulnerable countries already at high risk of debt distress.

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It stated that borrowing from capital markets is costing 36 low-income countries already at high risk of debt distress.

“This affordable capital crisis means that a growing number of low- and low-middle income countries will be unable to turn crisis hit economies around, invest in vital services such as health and education, or respond to the climate crisis,” the report said.

It quoted the Chief Executive of the ONE Campaign, Gayle Smith, that the situation made neither political nor economic sense that low- and low-middle income countries were being forced to pay premium prices for capital at the very moment they were trying to recover from the pandemic, deal with the fallout from Russia’s invasion of Ukraine, and respond to the growing threat from climate change.

“It’s even more stunning to consider that solutions are at hand, if the world’s wealthy and most powerful countries choose to pursue them – solutions that would enable developing economies to recover and grow and would also deliver big-time to a global green energy future,” it added.

Smith called on the leaders of G20 to implement the recommendations of their own independent experts group to accelerate efforts to reform the World Bank and triple the volume of affordable investment available to low- and low-middle income countries.

He said, “The G20 says of itself that it is the premier forum for international economic cooperation. It plays an important role in shaping and strengthening global architecture and governance on all major international economic issues.’ That’s a pretty bold mandate. It’s time for G20 leaders to step up and lead, and shape the global architecture and governance on the major issues of the day to serve, indeed, the entire globe.”