Bloated External Debt, Entrenched Corruption Eroding African Growth: ECA Chief

Sidi Ould Tah succeeds Adesina as AfDB President

Mounting external debt and widespread corruption are undermining Africa’s prospects at a time when technologies like Artificial Intelligence (AI) are transforming the global economy, says the Executive Secretary of the Economic Commission for Africa, Claver Gatete.

“External debt has swelled beyond USD 1.5 trillion, shrinking the fiscal space necessary for vital investments in health, education, infrastructure and inclusive growth,” Gatete said during a side event at the African Development Bank (AfDB) Annual Meetings in Abdjian, Cote d’Ivoire, this week.

His audience for a dialogue on the agenda for the second decade of implementation for the AU’s Agenda 2063 included Selma Malika Haddadi, newly-elected deputy chair of the African Union Commission (AUC).

Gatete noted that climate-induced disasters consume up to five percent of Africa’s GDP annually, while losses from over-invoicing, profit-shifting, and corruption are estimated at USD 88 billion each year.

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“We must confront the silent hemorrhage of our economies,” he said.

The continent, argues the Executive Secretary, is too reliant on external financing, with the average tax-to-GDP ratio remaining under 16 percent.

“… We are overly reliant on extractive rents and external flows. It is absolutely imperative that we transition to productive, tax-based economies by broadening the base, improving tax administration, and fostering inclusive growth,” said Gatete.

His assessment is reflected in an International Monetary Fund (IMF) report published this week.

The IMF warns that global public debt could rise to equal global GDP within the coming five years if current trends continue.

“The rising ratio of public debt to GDP reflects renewed economic pressures as well as the consequences of pandemic-related fiscal support. This trend raises fresh concerns about long-term fiscal sustainability as many countries face rising budget challenges,” reads the report.

The IMF indicates that one-third of the world’s countries, accounting for 80 percent of global GDP, have seen public debt shoot up since the pandemic. The global financial body warns that debt burdens continue to rise at an alarming pace.

“More than two-thirds of the 175 economies in our study now have heavier public debt burdens than before COVID spread in 2020,” reads the report.

Africa is no exception, with the continent’s external debt alone matching its annual GDP.

Gatete queried how a continent so rich in natural, human and cultural capital can remain so constrained in its progress, apparently in reference to failures in the implementation of Agenda 2063’s first 10-year plan.

“This is where the Second Ten-Year Implementation Plan becomes not just relevant, but urgent,” he said.

Gatete called for a collective push for global financial architecture reform, echoing statements he made last month urging for Africa to establish its own credit rating agency as a way to offset the high borrowing costs and limited access to capital brought on by dependence on western rating agencies.

Reports indicate that African countries pay more than four times the average three percent interest rate charged to their European counterparts on Eurobonds.

“The current system was designed when most African states were still under colonial rule. It is outdated, unjust and unfit for purpose,” he said.  “Africa deserves a seat at the table, not as a guest, but as a co-architect of a financial system that recognizes its realities and supports its aspirations.”

This week’s AfDB meetings saw the bank’s board of directors elect Sidi Ould Tah, a Mauritanian economist, as president. Tah will replace Akinwumi Adesina, who has held the position since 2015.

As his official duties as CEO came to a close, Adesina gave a press briefing coming as the first official event of the Bank’s 2025 Annual Meetings.

“[This] is one of my favorite moments of every Annual Meeting. It gives me the opportunity to speak frankly, reflect deeply, and thank you sincerely,” Adesina told the journalists, adding that the 2025 Meetings are “the final chapter of a remarkable decade of transformation.”

Delivering his remarks in English and French, Adesina rolled out what he described as the Bank’s biggest achievements, including the largest capital increase in its history, from $93 billion in 2015 to $318 billion; the record replenishment of the African Development Fund, raising $8.9 billion; and the half a billion Africans who have benefited from the Bank’s investments under his leadership.

The event was attended by journalists covering the Annual Meetings, which were expected to draw a record 6,000 delegates from 91 countries, including policymakers, private sector leaders, academics, civil society, and development partners.