Zambia’s looming debt crisis is a warning for the rest of Africa
A decade after debt relief, the country is horribly in hock again
DEBT stalks Africa once again. Over the past six years sub-Saharan governments have issued $81bn in dollar bonds to investors hungry for yield. Piled on top of this are murkier syndicated loans and bilateral debts, many to China and tied to big construction projects. Public debt has climbed above 50% of GDP in half the countries in sub-Saharan Africa. The risk of a crisis is growing. Consider Zambia. In 2012 this southern African country could borrow more cheaply than Spain. Now bond yields have jumped above 16%, suggesting that investors fear that it will default (see article). This fall from grace offers several lessons.
This article appeared in the Leaders section of the print edition under the headline “Lessons from Lusaka”
From the September 15th 2018 edition
Discover stories from this section and more in the list of contents
Explore the editionMore from Leaders
How to improve clinical trials
Involving more participants can lead to new medical insights
Houthi Inc: the pirates who weaponised globalisation
Their Red Sea protection racket is a disturbing glimpse into an anarchic world
Donald Trump will upend 80 years of American foreign policy
A superpower’s approach to the world is about to be turned on its head
Rising bond yields should spur governments to go for growth
The bond sell-off may partly reflect America’s productivity boom
Much of the damage from the LA fires could have been averted
The lesson of the tragedy is that better incentives will keep people safe
Health warnings about alcohol give only half the story
Enjoyment matters as well as risk