Quite optimistic, the African Development Bank (AfDB) said Africa will be more resilient to external shocks than in the 1990s. “Clearly the increase in debt coupled with serious budget deficits are putting a lot of pressure on African countries, but we don’t think it is going to put us back into the pre-HIPC type of era,” AfDB’s vice-president Charles Boamah told reuters.

This seems to be a matter of perception and it would seem that the multilateral finance institution has decided to see the glass half-full. “We certainly believe in the strength of the macroeconomic policies that many African countries are pursuing. Despite the fall in prices of commodities on which Africa heavily relies, most of its economies are far more diverse and developed than 20 years ago,” said Boamah.

The reality however regarding this opinion is that the diversification and development of which AfDB’s vice-president speaks was in fact supported by significant injections of foreign capitals which, due to the volatility of emerging markets, and also because of a certain stability recovered by western stock markets, are currently changing the geography of their portfolio.

Also, it has been noted that African economies are increasingly resorting to the support of International Monetary Fund and World Bank. This led Moody’s to affirm that countries from this region will not be able to avoid the sovereign debt market much longer as they strongly need foreign currencies. For now, only South Africa has issued a Eurobond. Cote d’Ivoire, Nigeria and Senegal are also expected to do the same, for sovereign Islamic bonds or sukkuks as well.

According to experts, one of the things Africa did not learn from what happened in the 1990s is the need to increase fully-local investment stocks that allow having a greater domestic savings, for long-term investments. Nowadays, arbitrage is difficult given that, as living standards of population improved, they started consuming imported goods while export revenues are plunging.

Idriss Linge