ECA warns of worsening debt distress across Africa, urges financial system reforms 

Most of these nations are allocating more resources to debt interest payments than to critical development sectors, according to Hanan Morsy, Deputy Executive Secretary and Chief Economist at the ECA.

Morsy made the remarks at the ongoing 2024 African Economic Conference (AEC) in Botswana, themed “Securing Africa’s Economic Future Amidst Rising Uncertainty.”

The event, co-hosted by the African Development Bank (AfDB), the United Nations Economic Commission for Africa, and the United Nations Development Programme, in collaboration with the Botswana Government, provides a platform for African leaders, economists, and policymakers to tackle the continent’s economic challenges.

In a fireside chat on “Global Financial Architecture Reform Agenda: A Focus on Debt and Tax,” Morsy emphasized the urgency of overhauling the G20 Common Framework for debt treatment.

“There is a need for an efficient, timely, and transparent framework. We must integrate the private sector, avoid prolonged negotiations, and ensure fairness across all creditors,” Morsy said.

Also speaking, Chief Economist and Vice President of the AfDB, Prof. Kevin Urama, emphasized the importance of strengthening financial management systems across African governments.

He highlighted initiatives like the Public Financial Management Academy for Africa, launched in 2021, which aims to modernize tax systems, expand tax bases, and digitize financial operations.

Urama stressed the importance of African countries presenting unified negotiation positions backed by robust data and analysis to navigate complex global financial systems.

“This collaborative model ensures resources are directed to where they are most needed,” Urama said.

Amid concerns over the rising debt profile of the country, the Lagos Chamber of Commerce and Industry (LCCI) has also recently expressed apprehension over the Federal Government’s plan to secure a $2.2 billion loan, cautioning that the move could exacerbate debt sustainability challenges and hinder critical infrastructure development.

The LCCI, in a statement released on Friday, highlighted the urgent need for Nigeria to diversify its funding sources beyond debt financing.

The Director-General of the LCCI, Dr. Chinyere Almona, urged the government to intensify efforts to expand the non-oil revenue base through tax reforms and promote export-driven sectors such as agriculture and manufacturing.