African countries are having a risky affair with Eurobond debt and it could end very badly…
The financial downturn of 2008, was the single largest catalytic factor compelling Sub Saharan African countries to seek alternative sources of financing for social and infrastructure development. The countries, previously reliant on bilateral loans and grants from both the West and eastern blocs, realized with the downturn that the honey pod had dried up.
In the ten-year period between 2006—when the first Sub Saharan African (SSA) Eurobond was issued—and 2016 more than a dozen African countries had racked up Eurobond debt of more than $23 billion, that carries an average annual coupon payment of +/- $1.7 billion. A Eurobond, also referred to as sovereign bond, is a debt security issued by a national government and is denominated in a foreign currency, usually dollar, rather than the euro that its name implies.
African countries in seeking alternative sources of funding ignored the bold writing on the wall which predetermined the debt crisis of the 1980s. The African countries in seeking these alternative sources of funding ignored the bold writing on the wall which predetermined the unsustainable debt crisis of the 1980s. In the period between 1970 and 1990 African countries borrowed heavily, with their debt becoming unsustainable. The cyclical events of unsustainable debt of the 1980s, when the continent’s debt position stood at more than $270 billion, was attributed to—depending on which side of the fence you’re on—poor governance, corrupt leadership and protracted civil wars in many African countries.
The financial downturn of 2008, was the single largest catalytic factor compelling Sub Saharan African countries to seek alternative sources of financing for social and infrastructure development. The countries, previously reliant on bilateral loans and grants from both the West and eastern blocs, realized with the downturn that the honey pod had dried up.
In the ten-year period between 2006—when the first Sub Saharan African (SSA) Eurobond was issued—and 2016 more than a dozen African countries had racked up Eurobond debt of more than $23 billion, that carries an average annual coupon payment of +/- $1.7 billion. A Eurobond, also referred to as sovereign bond, is a debt security issued by a national government and is denominated in a foreign currency, usually dollar, rather than the euro that its name implies.
African countries in seeking alternative sources of funding ignored the bold writing on the wall which predetermined the debt crisis of the 1980s. The African countries in seeking these alternative sources of funding ignored the bold writing on the wall which predetermined the unsustainable debt crisis of the 1980s. In the period between 1970 and 1990 African countries borrowed heavily, with their debt becoming unsustainable. The cyclical events of unsustainable debt of the 1980s, when the continent’s debt position stood at more than $270 billion, was attributed to—depending on which side of the fence you’re on—poor governance, corrupt leadership and protracted civil wars in many African countries.
