Sing'oei calls for lower borrowing costs for African countries

Foreign Affairs PS Korir Sing'oei. [Courtesy]

Foreign Affairs Principal Secretary Korir Sing’oei has called for lower borrowing costs for African countries, saying high risk premiums are costing the continent billions of dollars annually.

Speaking on Friday, August 28, Sing’oei said Africa pays about $75 billion every year in additional interest due to inflated risk premiums, despite African countries defaulting less than perceived.

“This Africa risk premium forces an unpleasant choice between servicing expensive debt and investing in health, education and climate resilience of our people,” he said.

The additional interest, he says, is more than what Africa receives in aid and climate finance combined.

The PS proposed a 200-basis-point reduction in the borrowing premium over the next three to four years, saying this could free up about $20 billion to finance the African Union’s Agenda 2063 infrastructure programme.

He made the remarks at the closing of the sixth Africa Conference on Debt and Development in Nairobi, where he also urged African countries to speak with one voice on debt justice, illicit financial flows and reform of IMF voting structures through the AU Common African Position.

The discussions formed part of a wider conversation on transforming international development cooperation, with members noting that the sector is facing a crisis of legitimacy and financing.

Shrinking aid flows, rising debt-service obligations and growing competition for public resources also prompted renewed questions about the value, impact and sustainability of existing development models.