Rising debt financing distress undermining service delivery and growth in African countries: Experts
Drake Nyamugabwa
Foreign and domestic loans meant for funding development projects in many African Countries have increasingly turned into a debt distress resulting into reduced financing for service delivery and development agendas.
Experts from different stakeholders have raised concern over the rising debt burden and have called for a prudent, transparent debt acquisition and management mechanism to avoid its effects on the economy.
Experts convened for the 2nd session of the African Conference on debt and development (AfCoDD) to discuss the challenges of resource and debt management on Thursday 18th August 2022 at Hotel Africana Kampala and Virtually.
The theme of the conference was: “Towards An African Debt Accountability Mechanism: A Critical tool for Achieving Public Debt Sustainability in Africa”
In his opening remarks the Executive Director, Uganda debt network (UDN), Patrıck Tumwebaze pictured above, said while applauding partners including civil society Organizations, SEATINI and ADRODAD among others for the collaboration to second AfCoDD and their involvement in fighting the issue of Debt in Africa.
He said that the conference is aimed at discussing the political mobilization of resources for and the goal of public debt, accountability among others in Africa.
“whereas debt and public financing has been an issue to various stakeholders, unfortunately not enough have been done as we see a continuing problem of debt distress, and huge development financing constraints and inadequate accountability” he said
He said that many countries are facing economic-social problems due to rising debt while calling for urgent and bold decision from stakeholders.
“We can’t move head on while sliding in a debt crisis. This must be stopped. I call upon urgent and bold decisions, proposals and recommendations to build a sustainable development agenda” he said.
The Chairman, Public Accounts Committee Hon. Medard Ssegona in picture above, said that that though there is a legal framework providing robust facilitation to transparency and accountability of public debt, there is for a correct computation of public debts information.
He urged concerned stakeholders to consider strict scrutiny of debt management to avoid the effects of high interest payments.
“Before Parliament considers approving a loan, it should be confirmed that the Development Committee has approved it and that the Treasury Secretary has confirmed that feasibility studies and evaluations have been conducted. Additionally, loans for ongoing projects seeking extra funding are granted without carefully reviewing the mid- or final-stage evaluation reports. These and other elements play a part in the trajectory of the public debt, which is unsustainable” he said
While giving a key note address, The Chairman Board UDN Hon. Omach Fred, said that Africa’s debts are foreign currency denominated coupled with cumulative depreciation in exchange rates that are less favourable to African countries and worsen their debt service burdens. He added that Uganda's current debt to GDP ratio Vs her African counterparts should not create a pseudo assumption that the country's debt stock is still sustainable, urging Ugandan government to re-enforce her revenue mobilization efforts to combat the current public revenue shortfalls.
Dr. Arthur Bainomugisha, ED Advocates Coalition for Development and Environment (ACODE) above, noted that “Climate change is real therefore, we should be ready for issues like food insecurity and high costs of productivity & political instability & epidemics. Climate finance is needed for mitigation, adaptation, and ‘losses & damages’. Mitigating global warming requires large-scale investments, Adaptation requires significant financial resources for adjusting adverse effects, and large sums are needed for losses”
The Executive Director SEATINI, Ms. Jane Nalunga said that the thre is need for responsible loan lending, and accountability from the the lenders of public loans must and question structural reforms.
“Debt is a serious problem in Africa and if we don’t address it for now we might not be able to develop our continent. Look at Sri Lanka right now , they are facing effects of debts . Let this be a lesson for us to reduce of the Debt ratio” she said
Uganda's debt to GDP ratio is estimated to be around 51%.
The courtiers participating in the AfCoDD includes Uganda, Kenya, Angola, Nigeria, Cameroon, Togo among others.
The first Uganda session was held in 2021 in August at Entebbe, Uganda.
