Arise and Shine Africa!

Many people believe that ostriches bury their heads in the sand to hide from predators. Perhaps that is where the metaphor of hiding one’s head in the sand to avoid confronting problems or unpleasant realities comes from.

However, it turns out that when these big birds are nesting, they dig holes in the ground, and they use them as nests.

Then during the day, they use their beaks to turn their eggs many times each day to ensure that they are evenly heated thus one looking at them from afar can mistakenly think they are hiding.

But anyway, ostriches aside, do you know governments that have mastered the art of burying most of their acts (and for no noble reason) until most details about their dealings become like a mystery?

Today let’s just focus on governments that avoid transparency and accountability, yet the repercussion of their secrecy ends up hurting numerous citizens.

Africa Now!

There is an increasing need to promote transparency, accountability and good governance in various African governments. If for instance, one looked at issues of their borrowing and spending, a glaring shortcoming would be found in many instances concerning unclear processes that do neither come to public light nor attempt to involve citizens.

However, when it comes to bearing such secret actions as borrowing without proper consultation, the bill of unsustainable debt is passed to the people through taxation, the rising cost of living, and the lack of proper health care and education.

Let’s just look at how this approach by those in power does not make any sense. Suppose someone offers to take you out for lunch and orders all manner of delicacies, then after having checked the menu and the cost for each item, s/he orders without even asking you what your favourite meal would be, then after the order is delivered the person gives you a small portion of the meal and eats the rest.

Thereafter when the bill is brought, the person who invited you pushes the bill to you to settle it and because s/he is well known by the owner of the restaurant you are held hostage until you pay while the one who brought you freely walks away. It would be ridiculous and quite annoying, right? But isn’t it what many of our African governments do? Getting into loan deals that we were not told much about and the next thing we hear is that our nation is in debt distress or that it has defaulted on several repayment installments.

African countries are faced with an impending debt crisis that is likely to compromise their achievement of major development goals stated within the national development plans, sustainable development goals and African Union’s Agenda 2063. 

The situation got worsened by the outbreak of covid-19 pandemic which has contributed to a shrinking African economy for the first time in the past 30 years.

The current debt situation calls for a new direction in debt management further justified by the evolving context in the continent which undermines accountability and transparency in debt contraction thereby eroding the social contract between Africans and their governments. This has left many people under the heavy burden of debt service, growing inequalities, rising poverty and limited opportunities to better their lives and achieve their wishes and aspirations.

Note that the debt crisis has been fuelled by budgeted corruption which has been driven by among other things, poor investments, poor policies, budget deficits and private selfish interests.

The above has led to the acquisition of costly and imprudent debt which has in turn, deepened poverty, and inequality in many African countries.

Repercussions

Unsustainable public debt resulting from irresponsible borrowing and lending characterised by a lack of accountability, sound governance and transparency, is a challenge that needs to be addressed to reduce the burden being imposed on the youth and unborn generations, the elderly, women and children, and persons with physical or mental disability.

The high cost of servicing debt has resulted in underfunding sectors such as health and education among others since governments’ capacity to provide adequate services to their citizens heavily depends on the availability of financial resources.

Therefore, the exponential rise in public indebtedness has been an obstacle to national development and social services delivery because a considerable amount of public funds is committed toward debt servicing. Africa’s debt burden has risen sharply since COVID-19 and the amount of bonds issued by African states on international markets has tripled in the last 10 years.

Debt servicing is almost three times as much as education spending, six times health spending, 22 times social spending and 236 times more than climate adaptation spending. Worst still, the extreme poverty rate in Africa stands at around 50 per cent among the rural population, compared to 10 per cent in urban areas. Together with poverty, malnutrition is also widespread in Africa.

The rising cost of living has been a pain in the neck for many and this has become overwhelming for most people as they worry over their health, employment, education, and livelihood in general.

Moreover, rising cases of troubled mental health and suicide due to the inability to deal with life stresses, such as financial problems, illness and other life struggles have been in the spotlight.

Africa Rising

Debt transparency is a very important element in the reforming of debt management. Borrowers should follow well-publicised, predictable and binding legal procedures in incurring new financial commitments.

They should also disclose the amount and contractual terms of their loans. This should include any plans for enhancing the security of the loan including resource-backed loans.

Moreover, there is a need to continuously build debt management capacity and analytical tools for debt management.

Debt management frameworks and practices should conform to all the principles of good governance (transparency, participation, accountability, reasoned decision-making and effective institutional arrangements). This can take care of the scenario of governments borrowing and citizens footing the bill for orders (loans) they did not make or benefit from.

Debtors and creditors should enter contracts that are as comprehensive as possible, and creditors should participate on comparable terms in any sovereign debt restructuring.

Africa must demand and obtain sufficient space at the negotiating table and begin taking its place as a rule-maker and not a rule-taker.

Finally, vices such as corruption and illicit financial flows must be curtailed to allow sufficient mobilisation and effective use of domestic resources.

The above are just a few steps that will help Africa rise towards sustainable debt management, gained through Transparency, Accountability and Good Governance.