Seven years after the much-lauded Gleneagles G-8 summit which wrote off the debts of Africa's most heavily indebted countries, recent economic shocks and growing government debt could cause several African countries to return to pre-2005 debt levels by 2013, DaMina Advisors has warned.

According to the frontier markets risk advisory and consulting firm, several African countries have returned back to unsustainable debt levels. The key difference from the pre-2005 debt, however, is that several African governments have accrued debt in the form of new types of complex debt obligations, owed to private financial entities, domestic lenders and shadowy international business groups or Asian banks.

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Prospects for further debt relief from traditional donors seem unlikely, as the International Monetary Fund and major European countries are themselves seeking funds. DaMina Advisors stated that the growing trend of re-leveraging in some African countries raises near-term economic growth risks to those economies.

“While many of the African governments that are re-leveraging often [give] good arguments for their increase in debt issuance, countries [are increasing] leverage beyond sustainable equilibrium levels, [thus] economic growth itself has become a victim of the rising debt stock [because] government debt crowds out private sector debt and interest payments balloon,” said DaMina Advisors.

“Botswana, one of Africa’s [most well]-managed countries, has seen its government debt grow from 7% of GDP in 2005 to 17% in 2011. Ghana, whose debt load to GDP was 48% in 2005, now has a debt load of almost 45% of GDP, which is almost as high as it was in 2005. Senegal, which received a substantial debt write off, has [grown] its government debt stock back to 41%. After debt relief in 2005, both Ghana and Senegal saw government debt ratios fall to mid-20% range.”