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INTERNATIONAL

businesses. The public sector is also faced with “Without strong productive
diminishing fiscal space as debt burdens mount.
In 2022, public debt in Africa reached US$ 1.8 capacities, countries remain trapped
trillion. Africa’s debt has increased by 183% in cycles of commodity dependence,
since 2010, a rate roughly four times higher
than its GDP growth rate. Rising debt levels with their economies characterized
and more expensive repayment costs limit the by low levels of value added and
fiscal space countries in Africa have to finance
their own development and invest in policies innovation.”
and programmes to boost human capital and
skills and develop core infrastructure, among
other investments. That means fewer resources
available to them to invest in core development challenges, the overarching challenge we see
policies and programmes, including in health in the LDCs is the systemic and structural
and education that can boost the skills of their underdevelopment of productive capacities.
people and help drive change. These implicate the real economic inputs,
the underlying economic ingredients that
Regrettably, official development assistance, are needed for countries to make goods and
(ODA) is also lessening as donor countries deliver services. It is what enables them to
face tighter fiscal conditions in their own grow, develop and trade. Without strong
countries. This has resulted in a shift in the productive capacities, countries remain
international aid architecture, with developing trapped in cycles of commodity dependence,
countries, like many in Africa, increasingly with their economies characterized by low
subject to less concessional forms of financing, levels of value added and innovation. It makes
and an increase in ODA loans rather than them hard places to attract the attention of
development grants. foreign investors and companies.

Resources and financing must be mobilized From the macroeconomic perspective, debt
to meet the challenges of multi-dimensional plays a huge role in country’s development
crises, especially if African countries and prospects. Rising levels of debt distress and
developing countries more broadly are to meet increasingly costly forms of international
the targets of the 2030 Agenda. In particular, financing mean that developing countries
borrowing countries need to be given more and LDCS in particular have little fiscal space.
and more appropriate resources as they face With the increasing threats of climate change,
growing challenges, including those from the debt threat is only rising. Recovery from
climate change. economic shocks is expensive, and when
countries have difficulties mobilizing their
Among the African countries themselves, own domestic resources, and in an increasingly
there are huge differences. Some, like South crowded space for foreign aid, debt is on the
Africa, are well developed, whereas others rise.
are least-developed countries or LDCs. What
is preventing the latter from realizing their Finally, if you have one message to our readers,
potential, and how does these countries’ debt what would that be?
figure into the matter? That Africa as a continent and its people have
You have raised a very important question. enormous potential. I am optimistic that
Right now, 33 of the 46 least developed despite the difficult challenges the continent
countries are in Africa. With some small island faces, the future will be a bright one for Africa
LDCs in the Pacific, as well as Asian LDCs, and Africans.
set to graduate in the next decade, the LDCs’
challenges will increasingly become Africa’s
challenges. While each country faces specific
and contextually important development

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