The United Nations Economic Commission for Africa (UNECA) has raised alarm over Africa’s mounting sovereign debt, which has reached a staggering $1 trillion, pushing the continent into a severe fiscal crisis.
Claver Gatete, the Executive Secretary of UNECA, issued this stark warning at the 44th Southern African Development Community (SADC) Summit held in Harare, Zimbabwe, as reported by Bloomberg on Saturday.
Gatete highlighted the dire situation, revealing that over a third of African countries are either in or at high risk of debt distress. This crisis is compounded by the significant reduction in traditional financial support mechanisms, including long-term concessional loans, official development assistance (ODA), and foreign direct investment (FDI).
“This is causing serious fiscal stress, with more than one in three countries in or at high risk of debt distress,” Gatete informed the leaders attending the regional meeting.
He further stressed the exacerbation of the crisis due to the declining inflows of concessional finance, ODA, and FDI, which have historically served as vital financial lifelines for many African nations.
Adding to the continent’s financial woes, Gatete pointed out the devastating impact of climate change, which he said is eroding an average of five percent of Africa’s GDP annually.
He cited Mozambique as a stark example, where climate-related damages last year alone amounted to 15 percent of the country’s GDP.
To address these challenges, Gatete emphasized the need for a reformation of the global financial architecture, arguing that Africa’s needs are often overlooked by key multilateral financial institutions such as the World Bank and the International Monetary Fund (IMF).
“That is why we are working on an African position to reform the global financial architecture so that Africa’s needs are taken into account,” Gatete said.
The warning from UNECA underscores the urgent need for both domestic and international actions to alleviate the growing fiscal pressures on African nations, and to ensure that the continent’s development trajectory does not falter amidst these financial and environmental challenges.