Attachments
By Assem Abu Hatab, Tabeer Riaz and Emmanuel Orkoh
What’s new?
With debts increasing by more than 180 percent over the past decade, nearly half of Africa’s economies are on the brink of debt distress. Unlike previous debt crises, the current one is characterised by a shift from multilateral to commercial and bilateral creditors, notably China, and the proliferation of Eurobonds, aggravating debt conditions. In recent years, fragile post-Covid-19 macroeconomic conditions, the repercussions of Russia’s aggression in Ukraine and accelerating climate crisis have further strained the public finances of many African countries.
Why is it important?
At a time of elevated global food prices and volatile supply chains, unsustainable debt levels pose significant threats to food security in Africa, where most countries heavily depend on food imports and around 50 percent of household expenditure is allocated to food. Pressured by the heavy debt burden, there is a risk that governments divert funds from essential sectors, such as education and health care, and crucial social programmes, such as food assistance and nutrition initiatives. The interplay between debt, development and food security creates a vicious cycle, raising the risk of socio-political unrest.
What should be done and by whom?
On the debt side, African countries need to mobilise more domestic resources through eliminating tax exemptions and implementing digital filing and payment systems. On the food security side, they need to prioritise investments in agriculture to build the productive capacities of their food systems and enhance their resilience to deal with future shocks. It is also crucial to support vulnerable households facing food insecurity through international humanitarian aid and targeted assistance programs. Government interventions to strengthen social safety nets, provide direct food aid, nutritional support, and financial assistance can help alleviate immediate hunger and malnutrition among these households.